Bankruptcy in Raytown, Missouri is a court proceeding through which a person or business who is unable to pay their debt is able to have some of their debt legally absolved, or "discharged." This theoretically allows the debtor to move on with a clean slate. However, bankruptcy is not a free ride, allowing someone who simply doesn't feel like paying their debts to get out of that legal obligation. It is designed to prevent debt which has slight chance of ever being paid back from ruining the life and finances of the debtor. It also carries significant long-term consequences, which must be carefully weighed against the potential benefits. For example, bankruptcy makes it very difficult for the debtor to obtain credit in the near future.
Accordingly, you should speak with a good Raytown, Missouri bankruptcy lawyer. Your Raytown bankruptcy lawyer can inform you of the costs and benefits of filing for bankruptcy, and give his or her professional evaluation as to whether or not it's a good option, given your specific circumstances.
Types of Bankruptcy in Raytown, Missouri
In Raytown, Missouri, 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 Raytown, Missouri will be about the same as anywhere else in America. 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 proceeds 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.
Under Chapter 13 bankruptcy in Raytown, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over an extended period of time, therefore theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Though applicable to individuals, Chapter 11 bankruptcy is typically used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is finalized, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
A main advantage of Chapter 11 bankruptcy is that businesses can continue their operations while going through the process. Also, they can continue to buy and sell their stock.
How Can a Raytown Bankruptcy Lawyer Help?
One should not make the decision to file for bankruptcy in Raytown lightly. Before making any such decision, it would be highly advisable to contact an efficient Raytown bankruptcy attorney.