Insolvency is a legal procedure initiated by a specific or a business that can not pay their debts and seeks to have the financial obligations released or rearranged by the courts. The 3 most typical types of insolvency proceedings are Chapter 7 individual petitions, Chapter 11 business reorganization and rehabilitation petitions, and Chapter 13 wage earner's strategies. Personal bankruptcy cases almost specifically fall under federal law, though states might pass laws governing concerns that federal law does not attend to. Special bankruptcy courts nationwide handle just debtor-creditor cases. Usually, any bankruptcy-related claim needs to be submitted with the U.S. Personal Bankruptcy Court. Terms to Know Insolvency Petition - The document submitted with the U.S. Insolvency Court that initiates a personal bankruptcy proceeding; usually consists of the debtor's assets, debts, and other liabilities Chapter 7 (Individual Bankruptcy) - A petition submitted under Ch. 7 of the U.S. Insolvency Code for an individual debtor to liquidate his/her possessions and settle or discharge financial obligations Chapter 11 (Company Reorganization) - A petition submitted under Ch. 11 of the U.S. Insolvency Code for a company to rearrange its liabilities and possessions, as well as settle or release its financial obligations Chapter 13 (Wage Earner's Strategy) - A petition filed under Ch. 13 of the U.S. Insolvency Code where an insolvent debtor may ask the court to grant additional time for the debtor to settle his/her financial obligations, so long as the debtor is earning a steady earnings Insolvent - Not able to pay one's debts as they come due Discharge - To release a debtor from his or her liability to pay a financial obligation For more read more legal meanings, visit the Findlaw Legal Dictionary.Learn more about FindLaw's newsletters, including our terms of usage and personal privacy policy.
Although a lot of attorneys are free to demand approval to practice in U.S. Personal bankruptcy Court, efficiently representing insolvency clients needs thorough understanding of the U.S. Insolvency Code. Attorneys without the proper experience might not understand all of the choices available to a client dealing with personal bankruptcy, and as an outcome, they may not be able to broker the most advantageous personal bankruptcy strategies.
Insolvency proceedings can have long-lasting advantages and repercussions for an individual's financial and household circumstances. This is another reason finding an experienced legal representative is vital. A lawyer who has assisted numerous clients through personal bankruptcy can much better prepare you and protect your properties and lessen the negative effects. If you are dealing with insolvency, contact a personal bankruptcy attorney instantly to preserve your legal rights and explore your legal options.