Bankruptcy proceedings are supervised and litigated in the United States bankruptcy courts.

These courts deal with the liquidation process under the bankruptcy laws of the United States. There are two types of bankruptcy, which are filed in a federal court of law. The first one is where a business files for bankruptcy. This chapter is made use of when a business, due to various reasons, is in dire financial trouble and is not able to service its debts and/or repay its creditors on time. The business may file of its own accord or may be forced by creditors to file for bankruptcy under Chapter 7.

Once a business is registered under Chapter 7 it may mean that the business, to settle its various debts, must sell its assets in order to distribute the proceeds among its creditors and close up business. The possibility of its employees losing their jobs is very real. Sometimes a complete takeover by another company may happen. If the business has issued bonds of any type, then the bondholders are entitled to first claim over the proceeds from the sale of the company's assets.

The second kind of bankruptcy is where an individual files. In a Chapter 7 bankruptcy, an individual is allowed to keep certain exempt property. Many types of unsecured debts are cancelled. The disadvantage of filing for personal bankruptcy is that the record stays on the individual's credit report for a period of ten years. This may make future credit less available to him or her. In some cases, removal of actual debt from the filer's record tends to improve his or her creditworthiness. At any rate, consumer creditworthiness is a complex issue and dependent upon many factors.

Chapter 7 provides detailed information on Chapter 7, Chapter 13 Bankruptcy, Chapter 13 Trustee, Filing Chapter 13 and more. Chapter 7 is affiliated with Chapter 7 Bankruptcy Forms.

Source: www.articlecity.com