Below is
your run of the mill bankruptcy definition which is boring
and dry and is what everyone understands at the most basic
level. What I am going to do in the bankruptcy section is
break down all of the Chapter 7 and Chapter 13 issues
separately, so for example when you see auto repossession
under the chapter 7 section, it will only relate to that
chapter, the same will go for all topics. That way I will
be able to walk you through the entire process with
examples and hypotheticals in a very simple common sense
approach, not in dry legal technical jargon which is meant
to confuse you and make this harder than it is. But then
again that’s why lawyers stay in
business!
Bankruptcy -- the
legal process in which a person or firm declares inability
to pay debts. Any available assets are liquidated and the
proceeds are distributed to creditors. A person or firm may
be declared bankrupt under one of several chapters of the
federal bankruptcy code: Chapter 7, which covers
liquidation of the doubter's assets; Chapter 11, which
covers reorganization of bankrupt businesses; or Chapter
13, which covers work-outs of debts by individuals. Upon a
court declaration of bankruptcy, a person or firm
surrenders assets to a court-appointed trustee, and is
relieved from the payment of previous debts.