Personal bankruptcy may at times be a facet of an individual’s financial journey. Going through a financial restructuring process comes with its own set of advantages and disadvantages; in certain situations, opting for personal bankruptcy may be the most suitable decision for an individual in West Virginia. When individuals navigate the bankruptcy process effectively, they can leverage its benefits while mitigating potential drawbacks. Seeking advice from a proficient legal counsel specializing in personal finance in West Virginia, such as Zeni Law, can be a helpful step in this direction.
Unforeseen events like job loss, medical expenses, or economic downturns often lead to financial hardship. In such situations, bankruptcy serves as a legal process to address overwhelming debt, offering individuals a fresh start and the chance to regain financial stability. It proves especially beneficial in relieving the burden of accumulating medical debts, enabling individuals to recover and rebuild financially. Similarly, the financial strain of divorce or separation may prompt individuals to seek relief through bankruptcy, addressing the aftermath and establishing a more stable foundation. It also provides a structured solution for those with high-interest credit card debt or unsecured loans, offering an opportunity to discharge or restructure these debts and rebuild overall financial health.
A Chapter 7 bankruptcy is one of the most common types among individuals and businesses. Under the terms of a Chapter 7 bankruptcy, the debtor must liquidate all assets except the bare necessities.
Companies choose this option when reorganization is not likely to return the business to solvency. Once a company liquidates its assets, it can escape most existing debt-related liabilities. Only entities that meet specific income requirements may pursue Chapter 7 bankruptcies.
Chapter 7 can be a suitable choice when debts are far too high for any realistic repayment strategy, even under the more lenient terms of a Chapter 11 bankruptcy. Assuming the company has chosen a structure that provides limited personal liability, a Chapter 7 bankruptcy should not affect personal assets such as cars, homes, and other valuables. Furthermore, certain company assets may be excluded from Chapter 7 – including work-related tools.
As evidenced by the rules of Chapter 7, sometimes individuals may need to file for bankruptcy. Medical debt, personal miscalculations, and the business liabilities assumed by sole proprietors and entrepreneurs in some forms of partnerships may all play a role.
Also known as a “wage earner’s plan,” this type of bankruptcy falls under Chapter 13 of the United States Bankruptcy Code. The process takes place over three to five years, and bankruptcy courts oversee it. Chapter 13 is geared explicitly toward high-earning, high-net-worth individuals who would be ineligible for Chapter 7 bankruptcy due to its income restrictions.
One key benefit of a Chapter 13 bankruptcy is that it generally lets individuals keep their home and a few other excluded assets. While Chapter 13 causes a temporary blemish on the debtor’s financial history, this blemish may pale in comparison to the lowered credit score associated with numerous missed payments.
Discharge is the end goal of bankruptcy filings. When the bankruptcy court grants a discharge, the debtor is no longer liable for paying those debts. If any obligations remain outstanding after a successful bankruptcy proceeding, the debtor will not be required to pay them. Once granted by the bankruptcy court, a discharge makes it illegal for creditors to seek repayment of outstanding debts. A discharge notice may specify legal penalties for any creditors who continue to pursue unpaid debts in the future.
From Chapter 11 to APAs and discharges, there are many options and possibilities when approaching bankruptcy in West Virginia. Companies should consult an experienced business law attorney to navigate this legal framework effectively. Choose Zeni Law to discuss bankruptcy-related questions in greater detail and receive personalized guidance not available through online research alone. Contact us today to get started.
