Boca Raton Bankruptcy Lawyer

Bankruptcy Overview

Bankruptcy is the legally declared inability or impairment of a person or corporation's abilities to pay their creditors. Bankruptcy can be involuntary, when a creditor files the claim, or voluntary, when the debtor files the claim.

The primary purposes of bankruptcy are 1) to repay creditors in an orderly manner and 2) to give honest debtors a chance to restart their financial life. Bankruptcy allows a debtor to be discharged, or relieved, of their debts.

There are two primary forms of bankruptcy. These are liquidation and reorganization. In the United States, the laws allow for one liquidation claim (chapter 7). All other forms of bankruptcy revolve around the idea of reorganization. A liquidation bankruptcy claim results in the debtor's legally unprotected assets being sold off to satisfy creditors' claims. A reorganization bankruptcy petition forces the debtor to reevaluate their assets and debts. They then are required to create a repayment plan to satisfy their creditors. This repayment plan must be court-approved.

Chapter 9 bankruptcy allows municipalities to reorganize. Chapter 11 allows businesses or individuals to reorganize. Chapter 12 lets family farmers reorganize their lives, and Chapter 13 allows individual "wage earners" to reorganize their lives.

The Boca Raton Bankruptcy lawyers of Eric N. Klein & Associates, P.A. focus primarily on Chapters 7 and 13.