In Orange County, California, bankruptcy is a court procedure in which a person or business has some or all of their debts absolved (or "discharged"), theoretically allowing them to commence 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). Remember, though, that bankruptcy should not be viewed as a fitting way to get out of debt that you don't feel like paying back. It is meant to serve as an option of last resort for people and businesses faced with debt that they will probably never be able to pay back. The decision to file for bankruptcy can result in negative consequences, such as damaged credit ratings, which must be seriously weighed against the probable benefits.
For that reason, it would be prudent to speak with a good Orange County, California bankruptcy attorney. This attorney will be able to advise you as to whether or not filing for bankruptcy is a good idea, given your specific situation. This determination is highly dependent on the details of each individual case, so an Orange County attorney's advice is really indispensable.
Types of Bankruptcy in Orange County, California
There are 3 bankruptcy tactics that are normally used in Orange County: Chapter 7, Chapter 13, and Chapter 11 bankruptcy. Bankruptcy is governed by federal law, so the procedures in Orange County, California are very similar to what they will be anywhere else in the United States. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her property, and use the proceeds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the appropriate property is sold, and the proceeds given to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will typically be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.
The other form of bankruptcy most frequently used in Orange County is Chapter 13. It allows a person to pay off their debt over an extended period of time, often consolidating it into one periodic payment. In this system, the amount of money the debtor owes is not actually reduced, but the payment of the debt is made far more manageable. This gives the debtor some breathing room, allowing him to continue to earn a living while gradually paying down his debts, and gives some security to creditors that they will eventually collect all or most of what they're owed. Chapter 11 bankruptcy is generally used by businesses, though it can be used by individuals (which is quite rare). Chapter 11 bankruptcy requires that the debtor come up with a reorganization plan - typically telling the court how they propose to cut costs, streamline their operations, and pay their debts. This plan must be approved by the participating creditors through a simple majority vote.
During the Chapter 11 process, a business can typically continue its operations, and the stock can be traded, even if it is de-listed from a major stock exchange.
How Can a Orange County Bankruptcy Lawyer Help?
Filing for bankrtuptcy in Orange County is an influential decision with costs and benefits that must be weighed carefully. Before filing, it would be a good idea to speak with a good Orange County bankruptcy attorney.