Bankruptcy
Business Bankruptcy
While Chapter 11 reorganization bankruptcy is available to individuals, it is most typically utilized by corporations, limited liability companies and partnerships needing to restructure business debt. In most cases, the business owners and their management team remain in control of the business’ assets and operations as a debtor in possession, although their actions and decisions are subject to court oversight and supervision.
Chapter 11 bankruptcy is a time consuming and expensive process. However, it is also often the only avenue available to a business that could be profitable but for the burden of excessive debt.
Individual Bankruptcy
If you are considering bankruptcy as the solution to your personal debt it is important that you first consult an attorney with bankruptcy experience to explain your options and their ramifications.
Chapter 7
Chapter 7 bankruptcy, commonly known as liquidation bankruptcy, involves the selling of a debtor’s nonexempt assets to pay creditors. Most consumer debt, including credit card debt, is erased within a few months of filing, with some of it being paid by the liquidation of assets and some being forgiven. Unfortunately, Chapter 7 bankruptcy is not all-inclusive and there are certain debts that are not discharged after filing for bankruptcy such as student loans, domestic support obligations and tax debt.
Am I eligible to file for Chapter 7?
In October of 2005, federal bankruptcy laws changed dramatically. As a result, filing for Chapter 7 bankruptcy became more difficult. The amended bankruptcy code now contains eligibility requirements based on established household income standards.
In addition, being eligible to file under Chapter 7 does not necessarily mean that form of bankruptcy is in your best interest. Our attorneys can help you determine what type of bankruptcy protection will be most beneficial for you. You may be better served by filing for Chapter 13, especially if you have built significant equity in your home.
Chapter 13
Chapter 13 bankruptcy allows individuals additional time to repay debts through a court-approved payment plan. At the end of the payment plan — usually between three to five years — all eligible debts are discharged. As with Chapter 7, certain debts are not discharged such as student loans, domestic support obligations and tax payments.
Is Chapter 13 right for me?
If you have built significant equity in your home, it may be more advantageous to file for Chapter 13 even if you qualify for Chapter 7. One of the major benefits of filing for bankruptcy protection is that an automatic stay is issued immediately stopping foreclosure proceedings. This allows you additional time to reorganize your debt and develop a payment plan to submit to the court while keeping you in your home. Additional benefits of filing for bankruptcy include stopping wage and bank account garnishments, repossessions and harassing calls from collections companies.