A bankrupt person is the one who is unable to pay the debts that s/he has after the deadline of the loan. The legal procedure declares one as a bankrupt person and takes off the responsibility of paying the debts. Bankruptcy is a legal condition that a person or an organization is unable to repay the debts to their creditors.
In the Federal courts, the bankruptcy cases are either filed in the chapters that mainly deal with the bankruptcy. These chapters are usually either chapter 7 or 13. Chapter 11 is also included in the ruling of the bankruptcy. The bankruptcy basic, which is a publication of the Bankruptcy Judges Division of the federal courts in the US courts, provides the protocol that is supposed to govern the debtors, creditors as well as the court executives among others. It also provides more detailed information that explains the bankruptcy frequently asked questions.
If totally unable to repay the debt, the creditor can decide to liquidize the position of the debtor or sell all the assets belonging to the debtor, so as to repay the creditor. This kind of case can be filed under chapter 7. Chapter 11 allows the debtor to either reduce the amount of the debt, the debtor may also request the repayment period to be extended so that they can either reduce the debt or repay it all. Chapter 13 gives the debtors to save their assets as they are protected from acquisition of their properties. An individual, partner or any other form of corporation is qualified to be tried under chapter 7.
If the jury rules out the petitions filed by the debtor and decides to accuse him/her in accordance to chapter 7, the debtor must provide all personal information including that of their spouses regardless of their current status e.g. separation or divorce. The debtor is also required to find trustee who their main roles is to guarantee the sale of the debtors assets to the after the courts approves this step. Other information that the debtor requires to provide include the amount of the monthly income and its source, all assets owned by the debtor and all the debtor’s monthly expenses among others.
If the case to be prosecuted under chapter 7 is ruled out, then a series of steps follows. These steps include some charges for converting the case to chapter 11 which has light penalties.