A legal process that rids you or lets you repay debts is called Bankruptcy. Such filings are public records and may show up on your credit report for as long as ten years. While you may find creditors not too keen to work with you post-bankruptcy, employers are legally prohibited from discriminating against you solely on the basis of you having filed for bankruptcy. You can seek legal assistance from Cleveland bankruptcy law firm if your employer discriminates against you.
Bankruptcies can widely be categorized as business or personal and can be used to either liquidate or reorganize your debts. Depending on your unique financial situation, a bankruptcy lawyer in Cleveland can guide you about the type of bankruptcy you can file.
The five most common types of bankruptcies are:
Chapter 7 Bankruptcy:
This type of bankruptcy involves liquidation. A bankruptcy trustee collects the non-exempt property of the debtor in exchange of cash. In case the asset has no equity beyond the exemption limit, the trustee can abandon the asset. However, if there is enough equity available to discharge liens, the trustee will distribute the funds among the creditors according to the provisions of the Bankruptcy Code. It is possible that the creditor may not get the full due or no dues at all. Once the distribution is done, the trustee may discharge the remaining debts as long as they can be discharged. In case of corporations, however, they do not receive a discharge and, in all likelihood, will cease to exist after liquidation and distribution of assets. You must seek advice from a Cleveland bankruptcy attorney before considering the next steps.
Chapter 13 Bankruptcy:
This chapter, usually applicable to individuals and some small businesses, does not help discharge all debts. But, you can get hire a bankruptcy lawyer in Cleveland to help you reorganize or restructure the payments in accordance with your income such that they become more manageable. Chapter 13 bankruptcy can also rid you of some part of the debt so that the other payments become affordable. This is done either by spreading the outstanding payments over a longer duration or paying only a chunk of the loan, resulting in a reduction of monthly (or weekly) payments. Normally, the duration of such revised payment plan lasts five years and during this period your financial activity is closely monitored by the trustee. However, the Cleveland bankruptcy attorney that you hire will need to convince the judges and the trustee that the creditors will get a fair deal on your proposed payment plan so they approve it. Your bankruptcy lawyer in Cleveland may need to negotiate with the creditors and make them agree to your proposed payment plan, as that will facilitate acceptance by the judges and the trustee as well. It is, however, not necessary that the judges and the trustee reject your proposed payment plan when creditors object to it.
Chapter 11 Bankruptcy:
This type of bankruptcy is not only the most commonly used by businesses but also the most complex bankruptcy filing. Chapter 11 bankruptcy is normally filed by corporates or businesses, but some individuals, with excessive and complex debts, also opt to take this route. Chapter 11 bankruptcy allows debtors to continue transacting business and owning the assets while trying to chalk out a reasonable reorganization plan such that the creditors can be paid off. But, in the past, businesses took unlimited time to propose reorganization plans. So, to curtail this delaying tactic, a 120-day limit was imposed under The Bankruptcy Abuse Prevention and Consumer Protection Act, 2005. If debtors fail to propose a reorganization plan, creditors reserve the right to propose their own plans.
Chapter 12 Bankruptcy:
Specifically meant for farm owners and fishermen, Chapter 12 bankruptcy allows debtors to maintain ownership and control of assets while working with the creditors to propose a fresh repayment plan. Therefore, family farmers and fishermen that have regular income can reorganize and discharge their debts over a period of three to five years.
Chapter 9 Bankruptcy:
Similar in nature to Chapter 11, this section allows and guides municipalities to restructure debts. Chapter 9 bankruptcy is applicable only to municipalities comprising cities, towns, villages, counties, taxing districts, municipal utilities, and school districts.
Given the legal complexities associated with filing for a bankruptcy, you need an expert help you discharge or restructure your debt. Rubinstein Law Firm, a reliable Cleveland bankruptcy law firm will work closely with you to ensure you peace of mind.