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Bankruptcies

Written by Mikki Krause
Last Updated: 12/22/2020
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Bankruptcies

Knowing someone's solvency, financial condition, and whether they are under particular financial stress and strain can be very important, especially if you have a financial relationship with that person or are considering one. There are many tools in Glad I Know's advanced people search engine "toolbelt," which can give you important insight and intelligence on a particular person's financial condition. Our bankruptcy search is one of those important tools.

"Why" a particular person filed for bankruptcy may be as important as knowing about the bankruptcy itself. The context of a particular bankruptcy in public records can provide a more detailed picture of a person's financial health and history. For example, someone declaring bankruptcy because of outstanding student loans may not be viewed the same way as someone filing due to credit card overspending. Similarly, a person who d bankruptcy decades earlier is not necessarily in the same financial position as someone who recently did.

Our Bankruptcies search provides access to bankruptcy filings from all 50 states, as well as the District of Columbia, Guam and Puerto Rico. All U.S. Bankruptcy District Courts are contained in our robust database. Coverage varies depending on the District Court and may include names, addresses, debtors, creditors and case details. Our bankruptcy database is updated frequently.

What is Bankruptcy?

A bankruptcy case typically begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, spouses together, or by a business. All bankruptcy cases are handled in federal court under rules outlined in the U.S. Bankruptcy Code. Bankruptcy cases are often characterized by the "chapter" in the U.S. Bankruptcy Code under which the case is filed. Three of the most common bankruptcies are Chapter 7, 11 and 13. Individuals may file Chapter 7 or Chapter 13 bankruptcy. Businesses may file bankruptcy under Chapter 7 to liquidate or Chapter 11 to reorganize.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is often referred to as liquidation bankruptcy. It is used by both businesses and individuals. Sole proprietorships can file Chapter 7, but only under the name of the owner. Partnerships and corporations can also file Chapter 7 bankruptcy. The Chapter 7 case seeks to serve as an orderly vehicle for liquidating the assets of the debtor and paying as many debts as possible. This is all done under the protection of the bankruptcy court and prevents a "race to the courthouse" (by creditors).

A Trustee is appointed by the bankruptcy court and is charged with a duty to gather and preserve the assets and oversee the liquidation of those assets. One goal of the Trustee is to maximize the assets of the debtor available to satisfy creditors' claims.

The Trustee will then solicit and issue payment to creditors according to a priority scheme set forth in the bankruptcy code. Each class of creditors must be paid in full before any proceeds can be used to pay a lower class. Administrative claims — those that arise from the filing of the bankruptcy itself — are paid first. Administrative claims could include a real estate commission for the sale of a property, the cost of preparing a car for sale, or accounting fees, and taxes.

Secured claims are paid from the sale of their collateral. If any proceeds remain, general unsecured claims are then paid.

Chapter 11 Bankruptcy

Chapter 11 is often referred to as "business bankruptcy," although some individuals file a Chapter 11 to reorganize debt either because they exceed the debt limits imposed on Chapter 13, or they do not want to be limited by Chapter 13's more strict payment structure.

In a Chapter 11 case, the debtor reorganizes its debts under the watch of the bankruptcy court, but the debtor has responsibility for the day-to-day operations. The debtor is called a debtor-in-possession (of its property) and serves as its own Trustee.

The aim of the Chapter 11 debtor is to propose and secure approval for a reorganization plan. The plan will almost always change whatever terms the debtor and the creditors operated outside of Chapter 11.

Chapter 13 Bankruptcy

A chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. During this time, the law forbids creditors from starting or continuing collection efforts.

Summary

Overall, our robust and comprehensive Bankruptcies search, which is included with each and every Comprehensive Report from Glad I Know, is a great tool to give you essential insight and intelligence on the financial condition of people around you and your loved ones.

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