In Alton, Texas, bankruptcy is a judicial process in which the debts of a person or business can be eliminated or restructured. This allows the debtor to climb out of a financial hole, and move on with a clean slate, which is sometimes more economically efficient than requiring the debtor to pay off everything they owe. 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.
Accordingly, you should speak with a good Alton, Texas bankruptcy lawyer. Your Alton 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 Alton, Texas
In Alton, Texas, 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 Alton, Texas will be about the same as anywhere else in America. Chapter 7 bankruptcy, or "liquidation," requires the debtor to sell some of his or her property to the highest bidder, and using the proceeds from the sale to pay down as much debt as possible. Once the sale is done, all dischargeable debt is deemed paid in full, whether or not the sale was able to raise the entire amount owed. You should note that some property (usually the types of property deemed essential) is fully or partially exempt from liquidation, meaning that the debtor gets to keep it. This includes houses, cars, and retirement accounts, among others. Some types of debts, however, cannot be discharged in bankruptcy, including taxes, child support, and student loans.
The other common bankruptcy scheme used by consumers in Alton 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 approved, creditors are not allowed to attempt to collect payment under the original agreements. Although it can be used by individuals, Chapter 11 bankruptcy is used almost exclusively 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.
One main advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Moreover, their stock can still be bought and sold.
How Can a Alton Bankruptcy Lawyer Help?
The decision to file for bankruptcy in Alton is not one to be made lightly, and it certainly should not be made without first obtaining the advice of an efficient Alton bankruptcy attorney.