In Denver County, Colorado, bankruptcy is a court procedure in which a person or business has some or all of their debts excused (or "discharged"), theoretically allowing them to start 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 convenient 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 potential benefits.
Accordingly, it might be a good idea to consult with a Denver County, Colorado bankruptcy attorney. Your lawyer will be able to counsel you about your options, including alternatives to bankruptcy, if such alternatives exist in your case. Whatever the result, it is often difficult to foresee the long-term consequences of any bankruptcy-related decisions, so the advice of a bankruptcy in Denver County could prove invaluable.
Types of Bankruptcy in Denver County, Colorado
There are 3 bankruptcy schemes that are commonly used in Denver County: Chapter 7, Chapter 13, and Chapter 11 bankruptcy. Bankruptcy is governed by federal law, so the procedures in Denver County, Colorado are very similar to what they will be anywhere else in the United States. Chapter 7 bankruptcy, or "liquidation," requires the debtor to sell some of his or her property to the highest bidder, and using the proceeds from the sale to pay down as much debt as possible. Once the sale is complete, all dischargeable debt is deemed paid in full, whether or not the sale was able to raise the entire amount owed. You should note that some property (usually the types of property deemed essential) is fully or partially exempt from liquidation, meaning that the debtor gets to keep it. This includes houses, cars, and retirement accounts, among others. Some types of debts, however, cannot be discharged in bankruptcy, including taxes, child support, and student loans.
The other common bankruptcy scheme used by consumers in Denver County is Chapter 13 bankruptcy. In this system, debt is not discharged. Instead, it is restructured. This allows the debtor to have the terms of the agreements that gave rise to their debts in the first place thrown out, and replaced with new terms that call for a structured repayment plan, designed to allow the debtor to survive on whatever income they have, and allowing the creditors to get paid back eventually. Once a payment plan is approved, creditors are not allowed to attempt to collect payment under the original agreements. Although it can be used by individuals, Chapter 11 bankruptcy is used almost exclusively by businesses. Not unlike Chapter 13, Chapter 11 focuses on restructuring of debt, rather than discharging it. Chapter 11 requires that the debtor come up with a reorganization plan designed to reduce debt and cut costs. Before being implemented, this plan must be approved by a majority vote of participating creditors.
One main advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Furthermore, their stock can still be bought and sold.
How Can a Denver County Bankruptcy Lawyer Help?
One should not make the decision to file for bankruptcy in Denver County lightly. Before making any such decision, it would be highly advisable to contact an experienced Denver County bankruptcy attorney.