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Bankruptcy courts offer unique framework for debt relief

Bankruptcy courts differ in their scope and operation from traditional courts that oversee criminal and civil matters. Federal bankruptcy courts offer unique opportunities for both individual debtors and businesses to begin again in the financial sense when they are faced with overwhelming debt.

A bankruptcy court provides a framework for a fresh financial start, whether for an individual or a business. It may be helpful for Floridians who are considering bankruptcy, whether a Chapter 11 filing or other form of bankruptcy, to understand how the process typically progresses. To begin, a debtor, often with the assistance of an attorney, files a bankruptcy petition. Accompanying the petition must be a statement of a debtor's assets, liabilities, income and detailed information about amounts owed to creditors. Bankruptcy petitions may be filed by a business entity, an individual or jointly by spouses.

After the petition is filed, debt collection actions are automatically stayed, which is often of great relief for a debtor, as creditors cannot garnish a debtor's wages, call to demand payment or bring a lawsuit against a debtor as long as the stay is in effect. What happens next will depend on the type of bankruptcy pursued. A debtor may be seeking a debt reorganization plan with a goal of paying his or her creditors, or be seeking to liquidate assets with payment to creditors as funds allow.

A person who has questions about bankruptcy, whether he or she is considering a filing or is already in the midst of a bankruptcy proceeding, may wish to seek out legal guidance. Both business and individual bankruptcy proceedings can be complex, and a person's livelihood and future often depend on the outcome. It is important that a Floridian's bankruptcy filing is handled with knowledge and care.

Source: uscourts.gov, "Bankruptcy Cases," accessed Dec. 4, 2015

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