California Bankruptcy Attorneys Web Site
Bankruptcy means an inability or worsened ability of individuals or companies to pay their debts. The term “bankruptcy” supposedly originates from Middle Age Italy, where a merchant, who could not pay his debts, usually had his trading bench destroyed, that is “banka rotta”, Italian for “broken bench”.
The rules and practices of the medieval bankruptcies were very tough towards the bankrupts and only backed the interests of the creditors. The first bankruptcy law was passed in England in 1542. All bankrupts were asserted criminals and were subject to punishment, which varied from imprisonment to death penalty.
Over the years as bankruptcy laws developed, they became more favorable towards debtors in distress, giving them an opportunity to get rid of some or all their debts to get a fresh start. It became obvious that an economy suffers from businesses being eliminated, not rehabilitated.
Being a poor thing, bankruptcy is becoming a common view in everyday life. Nowadays, we can see an increasing number of bankruptcies filed in the United States.
California Years Ended June 30, 2000-2004
|Year||Total filings||Business filings||Non-business filings|
|2004||132 464||4 145||128 319|
|2003||148 646||4 866||143 780|
|2002||148 393||5 305||143 088|
|2001||147 920||4 746||143 174|
|2000||160 564||4 800||155 764|
As you can see, the numbers are steadily going down over time. Still, in 2004 there had been about 360 bankruptcy filings a day in California, making it quite an ordinary procedure, a procedure you are probably contemplating to be engaged in.
So, you are about to file a bankruptcy case, but you don't know where to start. First of all, you must decide under what chapter you want to file. There are several chapters in US Bankruptcy Code, but the most often filed under are Chapter 7, Chapter 11, and Chapter 13.
Next thing to be done is filing a petition in the Supreme Court registry, with a sworn affidavit declaring that debtor is unable to pay his debts. This will be considered to be an act of bankruptcy and the Court will appoint an official receiver, usually a lawyer. From that moment on no creditor can take any legal action against the debtor.
Soon afterwards a general meeting is called for all the creditors to decide how to deal with the bankruptcy. A public sitting will later be held to examine the affairs of the debtor. The official receiver then prepares a proposal for the creditors. If creditors holding three fourths of the debt accept the proposal, then the Court will order the proposal binding on all of them.
Keep in mind, bankruptcy is a specialized area of law that is far more complex than it seems. The issues are not always apparent or simple. While Chapter 7 is something you can do for yourself, if you are diligent about gathering and preparing the information, and following through on details, Chapter 13 is not so well suited for debtors representing themselves since it has lots of unwritten rules and local customs that just aren't easily discoverable even to the generalist lawyer.
So pick a professional California bankruptcy attorney who can help you work through the issues, alternatives and implications of your choices. It is also likely that you will need a financial consultant to take care of tax and money issues.