Bankruptcy Due to or After Litigation
Sometimes litigation is unavoidable. Regardless of its underlying cause, litigation is often expensive, not only in court and attorney fees and judgments, but in time and stress; and sometimes the litigant, whether a business or an individual, is unable to maintain financial security, regardless of the outcome of the case. In these situations, they may find that the only reasonable solution is bankruptcy.
Let Bunch & Brock Help
If you or your business is considering bankruptcy as an option because of financial instability resulting from litigation, Bunch & Brock, Attorneys at Law, in Lexington, Kentucky, can help. With more than 35 years of experience, we can assist you in putting your finances back on track. Bunch & Brock will evaluate all your options and help you find what’s best for you and your specific circumstances. If you have any questions or would like to set up an appointment, contact us online or call us at 859.254.5522.
What is Bankruptcy?
Since the Middle Ages, bankruptcy has been a legal tool used to relieve individuals or businesses of the burden of excess debt. To begin the process, the debtor files a petition for one of several types of bankruptcy, listed below. If approved by the court, bankruptcy can allow an individual or a business to have a fresh financial start and an opportunity to begin again without the burden of debt hanging over them.
Types of Bankruptcy
There are numerous types of bankruptcy available for both individuals and businesses, but two are used more than others. When making the decision about whether to file, it is important to evaluate the options and determine which type of bankruptcy will best fit your needs. The experienced attorneys at Bunch & Brock will explain your options and devise a strategy that will help you meet your goals.
- Chapter 7 Bankruptcy: This is the most common form of bankruptcy. It allows some, if not all, debts to be discharged. A discharge means that the debts no longer exist and no longer have to be paid. During a Chapter 7 bankruptcy, non-exempt assets are sold and the proceeds used to pay off creditors. The remainder of the debts, if the assets do not pay them off completely, are generally dissolved.
- Chapter 13 Bankruptcy: Chapter 13 is best for individuals or businesses who have a steady income, temporary financial problems and a desire to repay some of the debt. In this type of bankruptcy, debt may be negotiated, and a plan submitted to the court for restructuring the debt. If the court approves the plan and it is successfully completed, the debts covered by the plan are discharged.
Common Causes of Business Litigation
While there are several different causes that can see a small business in court, some are more common than others. Among them are:
- Dissolved Partnership — When a business has multiple partners, and they disagree, the answer isn’t as simple as walking away. Without a contractual agreement in place, the dissolution of a partnership may land all the partners in court to decide who owns what.
- Lawsuits –Among the most common reasons for businesses to be sued are: charges of discrimination (against customers or employees); torts, which include injured individuals seeking damages; breach of contract; and wage discrimination, which may include minimum wage and child labor laws.
- Non-Disclosure/Non-Compete Agreements – Sometimes it is necessary for businesses to litigate to protect their own interests. If an employee shares confidential company secrets or leaves and works with a competing firm despite having signed a contractual agreement, a business may take them to court to make sure their competition does not gain an unfair advantage.
Common Causes of Personal Litigation
For the majority of people, actually being pulled into a court room is rare; it does in fact happen, however, and when it does it can be financially crushing. Some of the most common reasons include divorce, property disputes, car wrecks and other types of accidents and criminal charges. What they all have in common is that attorney fees, court costs, fines and judgments can mount up, leaving bankruptcy as the only feasible solution.
If you are considering filing bankruptcy, contact Bunch & Brock, Attorneys at Law in Lexington, Ky. as soon as possible. With more than 35 years of experience, the Bunch & Brock firm has the knowledge, resources and skills to assist you with your legal needs. If you have legal questions or would like to set up an appointment, contact us online or call us today at 859.254.5522.