For many, bankruptcy is a vague term that leaves much to the imagination. While a bankruptcy lawyer can help walk you through it and assist you, it still helps to know as much as you can. Here’s everything you need to know about bankruptcy in four minutes.
Modern bankruptcy laws weren’t passed until 1898, even though the U.S. Constitution gave Congress the power to pass laws regarding bankruptcy.
There are primarily two different kinds of bankruptcies for individuals and organizations: liquidations and reorganizations. Liquidations fall under Chapter seven of the bankruptcy loan.
In chapter seven bankruptcy, the debtor discharges all debts except for child support payments and taxes. A trustee is then appointed by the bankruptcy court to review your assets and take some to pay back creditors. The chapter seven debtor is only allowed to keep a certain amount of items named exempt property. Any property that is not exempt is then sold to pay back creditors.
Chapter seven bankruptcies are more common than you would think and many prominent figures have taken advantage of these laws, including Walt Disney. He used these laws to give himself more financial wriggle room, which allowed him to spend more time and resources creating some of his most iconic characters. Check out this video to learn more and consider hiring a bankruptcy lawyer if you need assistance.