Now that he is a Presidential candidate, Donald Trump’s personal and business affairs are bound to come under the microscope. One of those business affairs that some may have forgotten or others never knew is that Trump filed Chapter 11 bankruptcy four times. Chapter 11 is a type of bankruptcy that businesses use to stay afloat while reducing their debt. But reducing that debt can have an effect on individuals while the company reorganizes.
One way that businesses may reduce debt is to lay off employees. An employee who is laid off will then start to have financial challenges trying to maintain mortgage payments and other living expenses without a regular income. And that can even affect the entire economy as unemployment leads to less disposable income and less spending. But just as with personal bankruptcy, Chapter 11 bankruptcy may help a business stay open and eventually recover from its debt, ultimately rehiring the employees it had to let go, or hire other employees from the workforce.
Another type of bankruptcy that is affecting the economy is a Chapter 9 filing. This form of bankruptcy allows entire towns to file for protection to stay afloat. Unfortunately, one town in Kentucky has had to choose this route.
Hillview, a suburb of Louisville filed recently, after losing a legal dispute over a piece of land, the town with a $3 million annual budget found itself upside down with an $11.4 million judgment hanging over it.
Since 2011, the total number of bankruptcy cases in the United States has fallen by almost half. But Kentucky has benefited from that reduction. In fact, economic factors in Kentucky create a higher risk of both individuals and businesses filing for bankruptcy.
Even though bankruptcy may be the best option for many people and businesses and even cities struggling with an overload of debt, other options may be available. Some creditors would prefer to work out a payment plan than have to deal with a debt in bankruptcy. But for those who don’t, bankruptcy is a means of protection from further collection efforts by many creditors.
If your employer, or even your city, has found it necessary to file for bankruptcy, you may be struggling financially as well. A bankruptcy attorney can help you understand your options and, if necessary, walk you through the bankruptcy process.