Bankruptcy & What Does It Mean

Bankrupt means the inability to pay one’s debt. Bankruptcy means the legal procedure in relieving one of all debt. Assets may be sold off depending on the liquidity/net worth of that potential Bankrupt company or individual.

“Automatic Stay” is immediately created and all collection action against a company or individual must immediately stop. All correspondence with the Bankrupt customer must go through the Bankruptcy court or assigned attorney. The following are some Chapters in the Bankruptcy law.

Chapter 7 = complete liquidation
Chapter 9 = Adjustments of debts of a municipality
Chapter 11 = Reorganization, usually a company
Chapter 12 = Adjustment of a family farmer w/regular annual income
Chapter 13 = Adjustment of debts of an individual with regular income.

Good Luck!