In Chestertown, Maryland, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally excused, 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. However, bankruptcy should not be treated as a way to avoid debt that one simply doesn't feel like paying. It is meant to be a safety net for people or businesses who are truly unable to pay off their debts. Because bankruptcy is not without negative consequences (such as a heavily damaged credit rating for many years afterward), it should be viewed as an option of last resort.
Therefore, it is a good idea to talk with an experienced bankruptcy lawyer in Chestertown, Maryland. 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 individual case, the counsel of a Chestertown bankruptcy attorney cannot be replaced.
Types of Bankruptcy in Chestertown, Maryland
There are 3 bankruptcy schemes that are largely used in Chestertown: Chapter 7, Chapter 13, and Chapter 11 bankruptcy. Bankruptcy is governed by federal law, so the procedures in Chestertown, Maryland 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 assets in order to pay off as much debt as possible. Once the sale of the assets is verified, and the proceeds handed over to the creditors, the debt is perceived as discharged. Liquidation is basically selling assets to the highest bidder. Not all of the debtor's assets will need to be sold, and many types of property are totally or partially exempt, including homes, cars, retirement accounts, and insurance policies. This means that the debtor can keep them. It should be noted that some types of debts are not dischargeable in Chapter 7 bankruptcy, including student loans, criminal fines, taxes, and child support payments. Even when the bankruptcy process is complete, these debts will have to be paid in full.
The other popular bankruptcy system in Chestertown 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 decent amount of time. When a repayment plan is authorized by a court, creditors are legally barred from trying to collect under the original terms of their agreement with the debtor. Chapter 11 bankruptcy is primarily 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 - essentially 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.
One major 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 Chestertown Bankruptcy Lawyer Help?
One should not make the decision to file for bankruptcy in Chestertown easily. Before making any such decision, it would be highly advisable to contact an experienced Chestertown bankruptcy attorney.