Insolvency Can Happen to Anyone and Bankruptcy Can Help

The very word often brings an almost dirty connotation to the minds of many people. People with little knowledge on the topic of bankruptcy often have misplaced or incorrect feelings and beliefs on what bankruptcy is and what it actually does. Before researching and learning about bankruptcy I was one of those people who had misplaced beliefs. I thought of bankruptcy as if it were in the game Monopoly. I believed it was just something that happened to someone when they lost all of their money, were poor, and were not productive members of society. I could not have been more wrong. Not only have I learned that there are many types of bankruptcy, but I have learned that it affects people of all walks of life and financial status.

So what does bankruptcy basically do?

One of the most important things about bankruptcy many people do not know is that it can be an effective tool to discharge one’s debt and protect assets such as real property. Bankruptcy allows people in over their heads to improve their financial condition by either discharging unsecured debts or through the creation of a payment plan which suits the individual debtor’s ability to pay while still being able to live.

There are several types of bankruptcies used for various situations.

“Chapter 7 Bankruptcy involves the liquidation of an individual or business’s assets and is the simplest and fastest version available. Chapter 9 Bankruptcy is known as municipal bankruptcy used to resolve municipal debt. Chapter 11 Bankruptcy is known as reorganization or rehabilitation bankruptcy primarily used by business debtors which liquidate some functions and assets while a business continues to maintain their day to day operations relatively undisturbed. Chapter 12 Bankruptcy is rare and is used for rehabilitation of fishermen or farmers that have lost a portion of their capital due to bad catch or harvest, among other reasons.Chapter 13 Bankruptcy is a rehabilitation bankruptcy that comes with a payment plan for individuals with a regular source of revenue or know someone that is willing to pay the creditors in installments while a person’s finances is being restored. Chapter 15 Bankruptcy is known as ancillary bankruptcy and is used primarily in international situations to enable foreign investors and debtors to clear debts that they cannot pay and cannot be held liable in the issuing country.”

The author, Ben W. Koyl, is an attorney located in Chicago, IL. He is the principal of the Law Office of Ben W. Koyl, P.C. with offices located in the Chicago Loop, Beverly Woods / Blue Island, and Joliet, IL. The firm's website is http://www.chicagobklaw.com.