Bankruptcy Law

Chapter 11 bankruptcy law applies to partnerships and corporations. It calls for the general reorganization of the business to keep it alive in an attempt to pay creditors to the business. This chapter, just like any other, does not work in case the debtor has willingly skipped court proceedings even after being summoned. It also calls for the debtor to undergo proper counseling on how to handle credit and debt management.

Before any court procedures there must be legal fees paid to the court clerk. This is inclusive of$ 1000 filing fee and $39 miscellaneous administrative fee. There is an allowance for the fees to be paid in installments. This chapter recognizes that the individual and the assets in the business are separate entities. This means that the business debts will only be covered by the assets of the business without recouping the individuals' personal assets. Under this chapter a petition for bankruptcy may be voluntary or involuntary.

In case of a sole proprietorship, the law does not recognize the individual as a separate entity from the business' assets and as such, personal assets may be recouped in the debt recovery process. However, in some cases where partnership is involved in the bankruptcy case, individual assets may be recouped in the process of paying off the debt.

For a complete court procedure, a reorganization plan must be filed in court together with a written disclosure plan which shows what the business has in terms of assets. It may at times include the individuals' assets as well in case of corporations. The disclosed information is thereby treated with confidentiality.