Most people know a few things about both chapter 7 and chapter 13 bankruptcies. However, very few people will know what other less common forms of debt liquidation involve. In case you are caught up in a situation where you owe too much money, you should weigh your debt relief options. But what happens when public service bodies run into excessive debt? Here are a few things you should know about chapter nine, also known as municipal bankruptcy, and how Business Law Attorney Tipp City OH, can help the process.
The purpose of the bankruptcy
The main aim of this bankruptcy is to provide municipalities that are financially distressed a way out of their debt crisis by offering protection against creditors. The protection is supposed to give the municipality time to negotiate and make plans to resolve the debt owed.
Eligibility for chapter 9
Only municipalities are allowed to file for this debt relief type. A municipality is legally defined as a political subdivision, public agency, or state instrumentality. This definition means that the term municipality can be used to include cities, counties, school districts and other administrative units. Besides this main requirement, there are other requirements:
1. The municipality must have authority to be a debtor.
2. The municipality must have evidence to indicate that they have become insolvent. A Business Law Attorney Tipp City OH will help you organize this evidence.
3. They must be willing to come up with a plan of action that will allow them to repay the debts they owe.
Starting the case
If you are in charge of overseeing the activities of a municipal entity, you will be required to file for debt protection under chapter 9. The debtor should list all their creditors and the amount of money that they owe them. In case you are unable to file a list of your creditors when needed, the court may give you an extension.
From this point, the bankruptcy courts will sit and have a hearing of the case. During the sitting, they will determine whether the municipality deserves to get relief. Depending on the strength of the case put forward by the Business Law Attorney the municipality will either be granted or denied relief. Shipman Dixon & Livingston Co. L.P.A. Tipp City OH helps resolve such cases and many others. Browse website for more information.
