People can be unable to pay their debts {bankruptcy, person}|.
possessions
Bankrupt people can keep only personal effects and tools of trade. Court sells other possessions, or creditors repossess them.
loans
Loan cosigners assume loans.
involuntary bankruptcy
Creditors can force a debtor into bankruptcy {involuntary bankruptcy}, to prevent him or her from hiding or using assets. This action cannot be against farmers or wage earners.
voluntary bankruptcy
People can declare that they are unable to pay debts {voluntary bankruptcy} and ask court to find a solution. Sane people that have debts can declare voluntary bankruptcy. People must file a petition, creditor names, property list, asset list, income statement, financial history, and monetary-affairs state in USA District Court. If court grants bankruptcy, court official {referee, bankruptcy} leads a creditor meeting. Creditors elect a person {trustee, bankruptcy}, who gathers assets, questions bankrupt and witnesses, and checks for irregularities or fraud. Assets then go to creditors under legal formulas. For no law violations, bankrupt receives a document {discharge, bankruptcy}, which releases person from all debts except taxes, alimony, support payments for dependents, and deceit-caused liabilities. People cannot use Federal Bankruptcy Act again for six years.
types
Bankruptcy can be Chapter 7 or Chapter 11 bankruptcy.
Federal Bankruptcy Act allows debtors to have a majority of creditors approve a petition to repay debts from future wages, by paying regular fixed payments to a trustee, who then pays creditors {Chapter 13 bankruptcy}.
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Date Modified: 2022.0225