Can you still file bankruptcy after being adjudicated as an "insolvent"?
Can you still file bankruptcy after being adjudicated as an "insolvent"?
In the United States, it is possible to file for bankruptcy even after you have been adjudicated an insolvent. However, the federal bankruptcy code has specific rules about this. The debtor must first establish insolvency by proving that his liabilities are higher than his assets. If he cannot demonstrate insolvency, then the bankruptcy trustee will determine whether he is eligible to file.
The bankruptcy court can discharge the debtor from personal liability and from taxes. It can also prohibit creditors from taking action against the debtor. However, this does not prevent secured creditors from enforcing their lien. Thus, filing for bankruptcy is not an easy task if you have been adjudicated as an insolvent.
Bankruptcy laws were put in place to give honest debtors a "fresh start" by granting them a discharge from their debts. Filing for bankruptcy is a legal procedure involving the filing of a petition with a U.S. bankruptcy court. The petition is filed by the debtor or may be initiated by creditors. The filing creates a bankruptcy estate, which generally comprises all of the debtor's assets at the time of filing.
After being declared insolvent, you can also file a reorganization plan called Chapter 11. The reorganization plan will have to be approved by a committee appointed by the government, and it is usually made up of creditors and stockholders. This plan will contain details of the debt repayment and the discharge of the company. The plan may also include a compensation plan for shareholders.
If you have any questions or in need a Bankruptcy Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
