Bankruptcy is a legal process in a specialized federal court to help individuals and businesses get rid of debt or repay debts under the protection of the bankruptcy court. All bankruptcy cases are filed in federal bankruptcy court in the area where you live or where your business is located. There are two main categories of bankruptcy: “liquidation” and “reorganization.” Liquidation bankruptcy (also called Chapter 7 bankruptcy) is usually used by individuals (and sometimes by businesses) whose expenses are greater than their income, and who cannot pay their debts. One of the main purposes of liquidation bankruptcy is to wipe out certain debt and give you a fresh start. In an individual liquidation bankruptcy, the court will discharge certain debts that you owe, which means that the debts do not have to be paid. In exchange for the discharge, though, your nonexempt property (if any) may be sold, and the money used to pay your creditors. Reorganization bankruptcy can be used only if you have sufficient income to pay most of your debts over a period of time. There are several types of reorganization bankruptcies, but Chapter 13 is the type most commonly used by individuals or consumers. In Chapter 13 bankruptcy, you keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debts. Reorganization bankruptcy requires that you file a repayment plan that has to get approved by the bankruptcy court. Once you have filed bankruptcy, your creditors cannot go after your assets by garnishing your wages, repossessing your car, foreclosing on your house, or cutting off your utility services. This is called the “automatic stay.” At the end of the bankruptcy process, all of your debts are discharged or wiped out, except those debts that cannot be discharged in bankruptcy, such as child support, spousal support, student loans (except under extraordinary circumstances), and most tax debts. Bankruptcy LawBankruptcy laws focus on helping individuals solve and repay their debts after they have suffered heavy losses. In Utah, there were bankruptcy laws as early as 1800. However, the first voluntary bankruptcy laws were allowed through the Acts of 1841 and in 1867. These laws along with the Bankruptcy Act in 1898 also called the Nelson Act are what our modern debtor/creditor relation system are based on. It is common to hear that a person in a bad financial situation may “declare bankruptcy. Bankruptcy law is not always the first career path that law students think of, but it can be quite exciting and fulfilling. Where Do Bankruptcy Laws Come From?Federal bankruptcy laws, which govern nearly all bankruptcy proceedings, are statutory laws outlined in Title 11 of the United States Code. Because one code governs all bankruptcy proceedings in the country, this area of law tends to be very uniform and precise. In fact, many bankruptcy attorneys find this area of practice enjoyable for that very reason – often the answer they are searching for is outlined directly in the code itself. In particular, there are three common types of bankruptcy proceedings. Chapter 7 of the Code applies to individual petitions, while Chapter 11 proceedings are filed by businesses. Finally, Chapter 13 proceedings govern wage earners; petitions under this chapter ask the court for more time to allow a debtor to pay off his or her debts while earning a steady income. What Do Bankruptcy Lawyers Do?Bankruptcy lawyers may work on behalf of debtors (the individuals or businesses who owe the debt) or creditors (the individuals or entities to whom a debt is owed). In a bankruptcy proceeding, the ultimate goal is to benefit both the debtor and the creditors, by allowing creditors to become satisfied while still allowing debtors a fresh start financially. Bankruptcy lawyers on both sides of the equation work to facilitate this goal. On a typical day, a lawyer working on a bankruptcy case may draft motions and proceedings to be filed in court, as well as draft responses to motions and other filings. Bankruptcy lawyers engage in and review discovery documents, and hold meetings with clients and adversaries to discuss how best to move forward. Motions filed in bankruptcy cases will be set to be heard by the court, and lawyers will have to be prepared to argue them. However, junior attorneys in bankruptcy firms may not always get to court to argue these motions – that practice is often left up to the more experienced attorneys. Because of the variety of tasks performed by a bankruptcy lawyer, a variety of skills are needed as well. Bankruptcy lawyers must have a strong understanding of the Bankruptcy Code, as well as excellent legal research and writing skills. Lawyers in this field must be prepared to communicate with clients, as well as negotiate with adversaries in pending proceedings, so strong “people skills” are a must. Finally, litigation skills are a necessity, even though newer attorneys may not argue in court right off the bat. Bankruptcy lawyers should be ready to argue motions filed in court at any time; a full understanding of the filings involved, as well as well-practiced speaking skills, are a must in this field. How Can Law Students Prepare For A Career In Bankruptcy Law? Draper Utah Advantages and Disadvantages to BankruptcyDeclaring bankruptcy allows individuals or businesses that are unable to pay their debts to resolve their financial difficulties and start rebuilding their credit. Filing for bankruptcy has many advantages and disadvantages, depending on your situation. • Bankruptcy can be embarrassing. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
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