In Fort Mitchell, Kentucky, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally cleared, when they are unable to pay them. This hopefully allows them to begin over with a clean slate and move on, after 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 advisable to speak with a good Fort Mitchell, Kentucky 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 a Fort Mitchell attorney's advice is really indispensable.
Types of Bankruptcy in Fort Mitchell, Kentucky
There are 3 bankruptcy tactics that are typically used in Fort Mitchell: Chapter 7, Chapter 13, and Chapter 11 bankruptcy. Bankruptcy is governed by federal law, so the procedures in Fort Mitchell, Kentucky 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 funds 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 directed 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 Fort Mitchell 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 slowly 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 authorized by the participating creditors through a simple majority vote.
A major advantage of Chapter 11 bankruptcy is that businesses can continue their operating while going through the process. Also, they can continue to buy and sell their stock.
How Can a Fort Mitchell Bankruptcy Lawyer Help?
Filing for bankrtuptcy in Fort Mitchell 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 seasoned Fort Mitchell bankruptcy attorney.