There
are two main types of bankruptcy cases: liquidation cases and reorganization
cases. In a Chapter 7 Individual Bankruptcy, for example, all of the debtor's
assets that are not protected by the law (referred to as the "non-exempt"
assets) are surrendered in exchange for forgiveness of almost all debt.
By contrast, a Chapter 13 bankruptcy for most individuals allows the debtors
to restructure their debts so as to payoff the past due amounts over a three
to five year period. A thorough analysis of the debtor's assets, liabilities,
income, and expenses is critical to determining whether the filing of bankruptcy
is advisable, and if so, what kind of bankruptcy is appropriate. An attorney
is best able to render that analysis.
Creditors
also need the assistance of counsel in pusuing the collection of a debt
or other liability in the Bankruptcy Court. If a creditor does not file
the correct papers in a timely fashion, the creditor's claim can be waived
or discharged, even if it is normally a non-dischargeable debt. Hence, it
is extremely important that a creditor seek the advice of an attorney as
soon as possible.
