During the first half of April 2008 three airlines closed and filed for bankruptcy.
Skybus, ATA and Aloha Airlines all closed, citing a worsening economy and fuel prices as the reasons for their financial difficulties. These airlines could not turn a profit with the cost of fuel, repairs, upkeep, personnel and credit payments exceeding the amount of income from passengers traveling and other revenue sources by a large margin. The bankruptcy lawyers for these companies completed their filings at the beginning of the second quarter in 2008.
Following bankruptcy law was a viable option for these airlines, as it is for many businesses and individuals who don’t succeed and need to declare that their financial plans did not work out. In the cases of these airlines, according to their bankruptcy lawyers, the legal benefit of incorporation removed the direct loss and hardship of the owners and partners of these companies directly during bankruptcy.
Chapter 7 bankruptcy
When an individual or business files for Chapter 7 bankruptcy with a bankruptcy attorney, all assets and property are sold to pay for as much of the debt as is feasible. The individual or business under Chapter 7 is provided with a basic amount of assets to officially start over financially. Filing for bankruptcy under this chapter allows the debtor to start over much more quickly. Filing for bankruptcy under Chapter 7 works like this:
• The debtor files for bankruptcy with the U.S. Bankruptcy Court and lists all debts and assets
• A trustee is appointed to the debtor to gather all property to be included in the bankruptcy and distributes all assets to creditors
• Debtors can reaffirm any debts like car loans or mortgage payments that they want to continue making, thus keeping that property
• Creditors are given a chance to object to the bankruptcy
• If there aren’t any objections to the bankruptcy, the debt is usually discharged within a month or two of filing
Chapter 13 bankruptcy
When an individual or business files for Chapter 13 bankruptcy with a bankruptcy lawyer, all assets and property are maintained by the debtor who is given up to five years to pay back all debts. Typically these debts are repaid under better terms, such as little or no interest rates. While filing for Chapter 7 bankruptcy might be better suited for individuals and businesses that have little or no income, Chapter 13 bankruptcy is usually better suited for those that have a fair-to-substantial income. Filing for bankruptcy under Chapter 13 allows debtors to keep their income and pay back what they owe.