Bankruptcy itself is a federal procedure that is designed to help consumers and businesses to pay their debts or repay under the restrictions and the protection of bankruptcy courts. These fall into two categories, "Re-organization" and "liquidation".
The bankruptcy under Chapter 11 of U.S. bankruptcy law is often presented as a reorganization "bankruptcy means. Basically Federal bankruptcy laws dictate how a company goes out of businessand go about recovering from overwhelming debt return to profitability. This is usually through the use of a management plan under the guidance and the rules of bankruptcy courts has been made.
When a company file for Chapter 11 bankruptcy, you need to reorganize it. In this case, the activity should be further pursued, day by day, despite the bankruptcy court to approve all major business decisions. Chapter 11 is allowed, the only part of bankruptcy codeOperations continue to operate, and whether, and if the company can reorganize permit the exchange of old stock certificates for new ones in society, even if the new shares may be less than the original shares and debentures of the value activity . Whatever happens, the judge failed to determine if there are shareholders, or if the debtor is insolvent or not.
If a company decides to make under Chapter 7 of this failure is thatall operations must stop and go out of business. The bankruptcy court will appoint a trustee to liquidate all assets of the Company and to repay all the debts. These debts are the creditors and investors. In general, shareholders can recover some of their investments, but the stock of a company in Chapter 7 is unnecessary, as a rule.
Under Chapter 7 or "liquidation" the type of failure, a property that can not be sold exempt under the laws of the State Specialor "liquidation" due to repay the debt. E 'often referred to as separate "consumer Chapter 7" and "business Chapter 7" bankruptcy, and most usually takes 3 to 6 months.
In Chapter 7 bankruptcy is a property normally sold to reduce debt, but most of the unsecured debts will be eliminated from the profile of the debt trap, and it may be possible to classify objects such as clothes, cars and furniture to keep. Secured debt is different, say for example your carwere committed as collateral, you made the choice between the beneficiary to take the car or paying a lump sum payment to the creditor equal to the current replacement cost. Some types of secured debt can be eliminated.
Chapter 13 is the most common of all methods of re-organization of bankruptcy for consumers, which means they are able to maintain their properties, but repayments to be made and taken to ensure that within three to five years, all debts arerefunded.
All forms of failure of a large number of rules and exceptions to these rules and regulations. Essentially this is a very complicated process. This property, which determine what can and can not be kept and what types of debts are covered.
