A bankruptcy petition must designate one of six chapters of the Bankruptcy Code under which the case is filed. Certainly, one of the most important things debtor’s counsel can do is to help the client choose a chapter. The following is a brief overview of all the chapters.
Chapter 7 - The Liquidation Chapter The filing of a bankruptcy petition creates an estate which includes all the debtor's property as of the date of filing. Chapter 7 stands alone as the procedure that provides exclusively for liquidation (reduction to cash) of property of that estate (net of liens and exemptions ) by a trustee, payment of administrative expenses and distribution of any remaining funds to unsecured creditors, rejection of undesirable contracts and leases, and ultimately the discharge of dischargeable debts. Currently, about 70% of consumer debtors file under chapter 7. Historically, the vast majority of chapter 7 cases… Read More
Chapter 7 bankruptcy and chapter 13 bankruptcy are the two "consumer" type bankruptcies. Both end with a discharge of dischargeable debts, assuming the debtor is eligible for a discharge. Here are some of the more important differences between these two kinds of bankruptcy. The Payment Plan. Chapter 13 involves a payment plan that runs for three to five years. The discharge of debts comes at the end of the payment plan. The monthly payment is the amount the debtor can afford to pay, based on a projected income and living expenses. Creditors get only what the debtor can afford to… Read More
There are two things that stop creditors: first, the Automatic Stay and then later, the Discharge. The Automatic Stay. Federal Bankruptcy Law forbids creditors from engaging in any collection efforts against a debtor in bankruptcy. This protection is immediate and automatic. We call it, the "automatic stay." Once a creditor receives notice that a debtor filed a bankruptcy petition, the creditor must cease and desist all collection efforts, or risk being held in contempt of court and subjected to sanctions. The Discharge. At the end of a bankruptcy case, the discharge replaces the automatic stay. The discharge forbids creditors from… Read More
Let me guess. Something went wrong in your business and now it’s headed south. You’ve identified the problem and fixed it, but in the meantime, your debts got out of hand and now you don’t see how you’ll ever catch up. Your banker would like to help you, but with your payment history and your current debt load, there is no longer anything he can do. Many business owners and managers confronted with this situation just continue to struggle and hope that something will change. We hear in the news about great companies troubled by billions of dollars of debts… Read More
Hardly anyone ever thinks about the possibility of losing an inheritance in bankruptcy. This is possibly due to the fact that we are usually not expecting a loved one to die. But, of course, it can happen, and when it does, a loss of an inheritance to creditors only makes matters worse. Without the help of an experienced bankruptcy attorney, you could lose your inheritance in either of the two kinds of Consumer Bankruptcy -- Chapter 7 or Chapter 13. Chapter 7 Cases If someone dies within 180 days after you file a chapter 7 bankruptcy petition, and, as a… Read More