In New Gloucester, Maine, 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. 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 really 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.
Accordingly, it might be a good idea to consult with a New Gloucester, Maine 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 challenging to anticipate the long-term consequences of any bankruptcy-related decisions, so the advice of a bankruptcy in New Gloucester could prove invaluable.
Types of Bankruptcy in New Gloucester, Maine
There are 3 bankruptcy tactics that are typically used in New Gloucester: Chapter 7, Chapter 13, and Chapter 11 bankruptcy. Bankruptcy is governed by federal law, so the procedures in New Gloucester, Maine are very similar to what they will be anywhere else in the United States. Chapter 7 bankruptcy involves liquidation of many of the debtor's assets in order to pay off as much of the debt as possible. This sounds harsh, but there is an upside: once the liquidation is complete, the debts are legally viewed as having been paid in full, whether or not the full amount was covered by the liquidation. Liquidation involves selling some personal property, and using the funds to pay off debt. Numerous types of property are exempt from liqudiation, and therefore may not need to be sold. They include homes, cars, and insurance policies, among others. You should know that some types of debt cannot be discharged in Chapter 7 bankruptcy, including taxes, student loans, and child support.
The other frequent bankruptcy scheme used by consumers in New Gloucester 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 arrangements 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 authorized, creditors are not allowed to attempt to collect payment under the original agreements. 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 New Gloucester Bankruptcy Lawyer Help?
Filing for bankruptcy in New Gloucester is a very important decision, and should not be made easily. Before filing, one should consult with a seasoned New Gloucester bankruptcy attorney for assistance.