What is bankruptcy and how bad can it be?
Bankruptcy is a legal process, when people cannot repay debts to creditors may seek relief for some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often imitated by the debut.
Bankruptcy in the UK relates only to individuals and partnerships. Companies and other corporations enter into differently named legal procedures, liquidation and administration. However, the term `bankruptcy` is often used when referring to companies in the media and in general conversation.
Chapter 7 Bankruptcy
Under this type of bankruptcy, you’ll be required to allow a federal court trustee to supervise the sale of any assets that aren’t exempt. Money from the sale goes toward paying your creditors. The balance of what you owe is eliminated after the bankruptcy is discharged. Chapter 7 bankruptcy can’t get you out of certain kinds of debts. You’ll still have to pay court-ordered alimony and child support, taxes and student loans.
The consequences of chapter 7 bankruptcy are significant, you will likely lose property, and the negative bankruptcy information will remain on your credit report for 10 years after the filing date. Should you get into debt again, you won’t be able to file again for bankruptcy under this chapter for eight years.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy works slightly different, allowing you to keep your property in exchange for partially or completely repaying your debt. The bankruptcy court and your attorney will negotiate a three- to five-year repayment plan. Depending on what’s negotiated, you may agree to repay all or pay of your debt during that time period. When you’ve completed the agreed repayment plan, your debt is discharged, even if you only repaid part of the amount you originally owed.
While any type of bankruptcy negatively affects your credit, a chapter 13 may be more favourable option, because you repay some (or all) of your debt, you may be able to retain some assets. Chapter 13 bankruptcy will cycle off your credit report after seven years, and you could file again under this chapter in as little as two years.
Company Voluntary Arrangement
A CVA is a contract between the company and its creditors is a viable business looking to return to profitability, it can enter into a CVA, such arrangements are particularly useful when a company is basically profitable suffers a one-off difficulty, such as a large bad debt. CVA’sare used as a way of getting the company back on its feet.
A CVA can sometimes be an alternative to liquidation even if the company is not looking to return to profitability, so long as it provides a better return to creditors.
This court approved agreement with creditors enables the company to keep trading while also agreeing terms with the creditors to settle its debts. At the end of the agreed period, the Irvine lawyers company exits the CVA, with its creditors having either received full or part payment, depending on the terms agreed.
How can we help you?
We at Asmat & co assist in filing for Bankruptcy and direct the best solutions for reducing your debts in the most amicable and cost effective method, we will also assist in managing the above procedure and assist in the best possible manner to come to terms with its creditors.
