In Valdez, Alaska, bankruptcy is a court procedure in which a person or business has some or all of their debts cleared (or "discharged"), theoretically allowing them to begin with a clean slate, and move on with their lives no longer drowning in debt (and hopefully having learned to better manage their use of credit in the process). Of course, one should never view bankruptcy as a "get out of debt free" card, allowing someone to be absolved of their obligation to pay their debts just because they don't want to. It is meant to serve as a lifeline, preventing unmanageable debt from resulting in complete financial ruin. Accordingly, it is best treated as an option of last resort, because it can carry with it significant negative consequences, which must be weighed against the possible benefits. For example, filing for bankruptcy can severely damage a person's credit rating.
Therefore, it is a good idea to talk with an seasoned bankruptcy lawyer in Valdez, Alaska. They will be able to advise you on the likely legal and financial consequences of filing for bankruptcy, and help you determine if it's the right option for your. Because this determination depends heavily on the facts of each particular case, the counsel of a Valdez bankruptcy attorney cannot be substituted.
Types of Bankruptcy in Valdez, Alaska
In Valdez, Alaska, there are 3 types of bankruptcy in common use: Chapter 7, Chapter 13, and Chapter 11. Because bankruptcy is a creation of federal law, the procedures governing bankruptcy in Valdez, Alaska will be similar anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of some of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is fulfilled, and the proceeds given to the creditors, the rest of the debt is discharged. Liquidation is essentially selling assets to the highest bidder. Only some of the debtor's assets have to be sold, and varied classes of property are exempt, meaning that the debtor can keep them, including homes, cars, insurance policies, and retirement accounts. It should be noted that certain types of debt cannot be discharged through Chapter 7 bankruptcy, including student loans, child support payments, criminal fines, and recent taxes.
The other popular bankruptcy system in Valdez is Chapter 13 bankruptcy. Under this system, the debtor's debts are restructured, instead of discharged. This involves creating a new repayment plan that the debtor will find manageable, given his or her income, and that will result in the creditors being paid in a reasonable amount of time. When a repayment plan is approved by a court, creditors are legally barred from attempting to collect under the original terms of their contract with the debtor. Chapter 11 bankruptcy is almost exclusively used by businesses, but there is nothing that legally prevents it from being used by individuals, and its use by individuals is very rare. Chapter 11 bankruptcy requires the debtor to come up with a restructuring plan - telling the court how they propose to cut costs, improve their operations, and pay down their debts. The plan has to be approved by a majority vote of participating creditors.
While going through Chapter 11 bankruptcy, a business can continue operations, and its stock can continue to be traded.
How Can a Valdez Bankruptcy Lawyer Help?
Filing for bankruptcy in Valdez is a very important decision, and should not be made lightly. Before filing, one should consult with a good Valdez bankruptcy attorney for help.