When a person or a business can no longer pay their debts, her or she can state so legally by declaring bankruptcy. There are different types of bankruptcy’s and, depending on the type filed for, the person will meet with a judge to either determine an acceptable schedule of payments or to have most, if not all the debt discharged. When a business declares bankruptcy, in many cases it will simply close, but in other cases it can continue to operate by paying reduced payments to its creditors.
From an individual point of view there are three types of bankruptcy in Santa Rosa; Chapter 7, Chapter 12 and Chapter 13. Chapter 7 is by far the most common form of declaring bankruptcy, Chapter 12 is restricted to farmers or fishermen and Chapter 13 is used by those who can demonstrate to the court that they can pay back their debts if reorganized over a period of time.
For businesses there are two types; Chapter 7 and Chapter 11. A business that declares Chapter 7 will close its doors and cease trading. Chapter 11 allows the company to clear the debt once payments have been restructured.
Chapter 7 is used by most individuals and small businesses that simply want to clear the slate and start a new beginning. In a business case, it will close. However, if it is an individual, the court will declare that the bankrupt person cannot meet their debt obligation and at that point almost all the debts will be void. Certain debts, such as student loans, must be paid regardless.
The basic criteria when declaring bankruptcy in Santa Rosa is to impress upon the court that one’s income is insufficient and unable to meet the obligations. When Chapter 7 is declared, the individual will lose most of his or her assets, however, the residence and vehicle are not touched unless either is encumbered and payments cannot be made.
Every available form of bankruptcy has its place but they all represent a costly way of getting debt relief. Regardless of who the bankrupt is, regaining credibility is difficult and may take years. In the event credit is granted, the interest rate is usually very high because the individual represents a high risk to the creditor.
If you are deeply in debt and considering bankruptcy in Santa Rosa you are invited to discuss the various options Robert Bialkin; Attorney and Mediator.
