The basic purpose of bankruptcy laws is to provide a fresh start for individual debtors and keep a firm’s going concern value intact. Chapter 7 covers the process of liquidation and involves the appointment of a trustee to collect the debtor’s non-exempt assets and sell them. Once the assets are sold, the proceeds are distributed to creditors according to their unsecured debts and priority of priority. This type of filing is not recommended for companies or organizations.
During a bankruptcy
During a bankruptcy, certain debts are not discharged. The laws governing this type of debt will provide a schedule for repayment. Secured debt can be repaid after a bankrupt has declared bankruptcy. A secured loan is one that requires collateral, such as real estate or personal property. A trustee can take possession of these assets and sell them to repay the lender. However, this type of loan is not advisable for most people.
Federal bankruptcy laws
The federal bankruptcy laws also make certain types of property exempt. The common types of property that can be exempted are equity in a home, a car, and equipment used for work. Other items that can be exempt include Social Security checks, pensions, and veteran’s benefits. The list of available property depends on your state. Contact a bankruptcy lawyer to learn about what your state allows and what it doesn’t.