Bankruptcy is the legal method for a debtor to discharge or relieve himself of the debts that he owes. While no debtor is guaranteed a total discharge of his debt, most debtors who file for bankruptcy are given such relief. One of the primary purposes of the Bankruptcy Act is to relieve the honest debtor from the weight of oppressive indebtedness and to provide the debtor with a fresh start.
Various Bankruptcy Procedures For Consumers
There are several different types of bankruptcy procedures. They are generally referred to by their Chapter number in the Bankruptcy Code.
Chapter 7 is the type of bankruptcy most frequently used by individuals. Under this Chapter, a court-appointed trustee collects any assets the bankruptcy petitioner may have, and makes distributions to creditors. The petitioner can keep assets that are exempt either under Federal law or the law of his or her home state.
Chapter 13 is another frequently used type of bankruptcy. It is designed for an individual debtor who has a regular income and stable job. Under this procedure, the petitioner pays debts off over a three-to-five year period and is allowed to keep his or her property. A Chapter 13 can generally be filed at any time.
Individuals may also use Chapter 11 reorganizations, but this form is generally targeted to businesses. Farmers can use Chapter 12. Chapter 12 allows farmers with real estate debts to pay off the debts from the profits generated by future crops.
Chapter 7 bankruptcy is also known as liquidation. In the typical Chapter 7 bankruptcy, a trustee collects the non-exempt property of the debtor, converts the property to cash, and distributes the cash to the creditors. In contrast, Chapters 11, 12 and 13 of the Bankruptcy Code allow for debtor rehabilitation. In those cases, the creditors look to the future earnings of the debtor, not the current property of the debtor. Under rehabilitation, the debtor will generally retain his assets and property and make payments to creditors pursuant to a court approved plan.
If you or a loved one is in need of legal assistance, call Ray Hodge & Associates at (316)269-1414. The initial consultation is free of charge.
Ray Hodge & Associates proudly represents victims and their families across the state of Kansas, including Wichita, Andover, Derby, Goddard, Haysville, Mulvane, Rose Hill, Newton, El Dorado and Hutchinson. Call today for a free consultation all over the state of Kansas. We have proudly served clients in Sedgwick, Butler, Sumner, Harvey, Kingman and Reno Counties.