In Newport, 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 Newport, 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 Newport attorney's advice is really indispensable.
Types of Bankruptcy in Newport, Kentucky
In Newport, Kentucky, 3 types of bankruptcy procedures are in common use: Chapter 7, Chapter 11, and Chapter 13. Being governed by federal law, the procedures involved in filing for bankruptcy in Newport, Kentucky will be roughly the same as everywhere else in America. Chapter 7 bankruptcy involves liquidation of part of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is done, 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 various 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 form of bankruptcy most frequently used in Newport 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. Although it can be used by individuals, Chapter 11 bankruptcy is used almost always 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 enforced, this plan must be approved by a majority vote of participating creditors.
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 Newport Bankruptcy Lawyer Help?
Filing for bankruptcy in Newport is a very important decision, and should not be made easily. Before filing, one should consult with a seasoned Newport bankruptcy attorney for assistance.