Knowing what to expect is always important in any stressful situation and being aware of what to anticipate during the bankruptcy process is no different. What to expect from the bankruptcy process generally depends on what type of bankruptcy protection the filing party is filing for, however, bankruptcy protections in general can provide debt relief to struggling consumers and businesses.
There are generally two type of personal bankruptcy including reorganization, or Chapter 13, bankruptcy and liquidation, or Chapter 7, bankruptcy. This is also true of business bankruptcy options which include reorganization, or Chapter 11, bankruptcy and Chapter 7 liquidation bankruptcy options. At the beginning of the bankruptcy process, the filing party will fill out worksheets and schedules which will help with their bankruptcy petition filing.
Once the filing party has filed for bankruptcy, an automatic stay goes into effect that prevents creditor collection actions during the bankruptcy process no matter what type of bankruptcy the filing party is filing for. In circumstances of both Chapter 7 personal bankruptcy and Chapter 13 personal bankruptcy a trustee is appointed, however, the trustee does not take possession of the filing party’s property in the Chapter 13 bankruptcy which is also true in a Chapter 11 business bankruptcy. A business going through the Chapter 11 business bankruptcy process is generally permitted to continue to run the business during the process.
The bankruptcy process can seem complex but if the party considering bankruptcy fully understands the different options and how they help, they can select the best option for them. Bankruptcy can help those stressed and overwhelmed by debt enjoy a fresh financial start and future.