Although bankruptcy is seemingly quite common in the world today, there are still many people who understand very little about the way that the whole process works. A lot of bankruptcy questions still proliferate on the internet and there just can’t seem to be enough resources to answer them all. Here are some of the most common bankruptcy questions:
1) What is bankruptcy?
Many people ask this bankruptcy question mainly because of the discrepancy between the reality of bankruptcy and what is portrayed in media. Many people think that bankruptcy is just something that happens. But actually, bankruptcy is something that’s declared by law. When your company goes bankrupt, it wouldn’t be a sudden occurrence of you finding out that the treasury is empty. It would be a decision reached by either your company or your creditors. It would be a process to be decided and overseen by the courts.
2) Is bankruptcy something to be desired?
This bankruptcy question has something to do with the pros and cons of bankruptcy. In order to answer this question, you need to understand that bankruptcy should be considered as a last resort. Another important factor in answering this bankruptcy question is knowing the fact that although declaring bankruptcy will be able to rid you of most of your debt, it will also clear out most of the assets of the company. If you are a single proprietorship, you have to know that the assets of your company and your personal assets have no distinction under law. You will be cleaned out.
3) What’s Chapter 13 and Chapter 7?
Many people who are just learning about the different facts regarding bankruptcy are faced with the terms “Chapter 13” and “Chapter 7”. It is only natural that this is one of the most common bankruptcy questions circulating today. The fact is that Chapter 13 and 7 are two chapters of the bankruptcy law that people can file under. Chapter 13 allows a person to renegotiate with the creditors. Under chapter 13, a person can be allowed to repay all of his debts over time.
The second part of this bankruptcy question is chapter 7. Under chapter seven, a person can choose to liquidate all assets and have those assets distributed by the court among creditors. Not many people know that even in bankruptcy, you still have a choice.
4) Which chapter is for me?
When people learn about the options that they have for filing bankruptcy, the next bankruptcy question they raise is what chapter should they choose? Well, chapter 7 seems to be a popular choice since it does not require you to pay back any of your debts. However, if you choose chapter 13, you will get a better opportunity to discharge your debt and still keep all of your stuff. Sure it will be harder, but in the long run, it will leave you with more stuff.
5) Will all of my debts be wiped out by bankruptcy?
Many people think that by declaring bankruptcy, all of their debts will be wiped out. However, the real answer to this bankruptcy question is no. There are certain types of debts that are protected by law in case the debtor declares bankruptcy. This bankruptcy question has risen in popularity ever since the government released the new bankruptcy law which is stricter in discharging debts.