Steps In Filing Bankruptcy - Bankruptcy Process Made Clear


Filling bankruptcy is not just the case with individuals under enormous debts. It so happens that several small and large corporations face the same problems many a time. These are difficult times for the company in question. There are issues regarding the employees and the investing agents as well. The steps in filing bankruptcy are made simple if there is a good lawyer representing the client to sort out the matter. Filing bankruptcy online is also a feasible option.

There are several separate steps in filing bankruptcy. About six months before the actual filing bankruptcy, the applicants must compulsorily undergo counselling for credit. The applicants also need to fill out forms and declare all their property. Second in the list of steps in filing bankruptcy is to check for chapter. It is decided by the federal organization if the applicant can opt for chapter 7 or 13 as per the policy. Next, means such as income and expenses are tested.

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Individual owned property that does not come under any exemption is liquidized and equally partitioned among the claimants. Assets or possessions owned by the particular corporate entity are entrusted to a 'trustee' who liquidates them and distributes the money among all the creditors. Payments are also made to the investors of the corporation. The corporate entity is currently out of business and bankrupt. Hence, its normal operations are not permitted to be carried out.

In terms of steps in filing bankruptcy for corporations, the creditors come under the secured and unsecured categories. The former includes banks that have proper mortgage claims and are always given higher priority during payments.

The latter comes second in terms of priority and these have taken more risks than the secured creditor. However, the third category of investors (stock holders) has the last claim. They are ensured payment only if the first two investors have received theirs.

Filing bankruptcy costs vary for each step. The counselling is normally free or goes up to fifty dollars. They provide free means test. The ticket out is also charged nominally but court and attorney expenses and fees may go up to a few thousand dollars in all. Straight bankruptcy filings that come under the chapter 7 are usually more expensive and up front.


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