Although it can have negative connotations, bankruptcy is a form of financial reorganization that is helpful to many businesses and individuals. Before deciding if starting a bankruptcy case will be helpful to you, it is important to get an overview of the various kinds of bankruptcy filings and how they work. Fort Walton Beach bankruptcy attorneys are able to assist in all kinds of proceedings in the federal courts in your area.

Does it matter where I file bankruptcy?

All bankruptcy laws are federal laws, so there are no individual state laws for bankruptcy. The same general rules apply everywhere in the country, but state laws are sometimes used during bankruptcy proceedings. There are a number of unique ways that state law may be applied to decide substantive issues within the federal bankruptcy court depending on the physical location of the creditors and debtors. 

This is why you should try to find an experienced attorney in your area who will be able to stay in contact with you, meet with you when necessary, and attend local bankruptcy courts in your state. Bankruptcy is even more complicated than most other areas of the law, so it can be difficult to make generalizations until a lawyer has spoken with you about your specific financial situation. 

Common types of bankruptcy

There are a number of different kinds of bankruptcy proceedings that regularly happen to help a debtor improve their financial situation. These include:

Chapter 7

Chapter 7 is used in many situations because it allows the property of the debtor to be sold off to satisfy creditors, with certain exemptions for essential items. This is referred to as liquidation. There have been changes to liquidation requirements in recent years, so this is going to be a less common form of bankruptcy than it has been in the past.

Chapter 13

Chapter 13 can be beneficial for those who have a consistent source of income such as a regular full time job. This will allow the debtor to keep some assets while using their income to pay off debts within three to five years. Common sources of consumer debt like credit cards and personal loans are usually reasons why someone would choose to begin chapter 13 proceedings.

Debt Counseling

While debt counseling may not involve someone formally filing for bankruptcy, it can be an important step to help reorganize a person’s finances and help them avoid more severe consequences. Counseling is a good first step before committing to bankruptcy proceedings.

Chapter 11

This is a type of reorganization that is available to businesses. A court appointed trustee aids in the process of helping the debtor business pay off existing obligations while creditors are given favorable terms for repayment on any outstanding obligations.   

Other filings that may occur

There are also other bankruptcy proceedings related to fraud and criminal offenses, or financial restructuring that may occur outside of the courts. 

Get help deciding if bankruptcy is right for you or your business

To speak with a local attorney in Fort Walton Beach about filing for bankruptcy or any related issues, contact ASG Legal. They will provide expert advice regarding how to proceed in your particular situation.