One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a "fresh start" by wiping out his or her debts. In these troubling economic times, I have a lot of clients in my offices asking if filing a bankruptcy is their best option. Whether it be a Chapter 7 petition, for a straight bankruptcy, as a “fresh start;” a Chapter 13 petition for a personal reorganization plan; or, a Chapter 11 for business reorganization; the choice is never easy. Often, I have clients who are embarrassed with themselves, or just plain mad at the world for what has happened to them. It is true that often they have no one but themselves to blame for bad decision making. However, the vast majority of my cases involve job loss, medical problems, or both. These are conditions out of people’s control. In these cases, Bankruptcy is a viable and government-supported option.
My objective is to provide the person, thinking about filing bankruptcy, the information he or she needs to make an informed decision. You will then have a good understanding of what the law allows.
Chapter 7 bankruptcy, sometimes called a straight bankruptcy is a liquidation proceeding. Chapter 7 is also known as "personal bankruptcy," and is the most common type. Businesses can file under Chapter 7 as well. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts, usually within five (5) months. In the vast majority of cases, the debtor has no assets that he would lose, so Chapter 7 will give that person a relatively quick "fresh start".
Chapter 11 bankruptcy is for businesses that wish to reorganize, but it is also available to individuals who do not meet the debt limit levels for a Chapter 13. It is a complex type of bankruptcy that requires the assistance of an attorney.
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep; such as a mortgaged house, or car. It is also only an option for individuals who have predictable income, and whose income is sufficient to pay their reasonable expenses, with some amount left over to pay off their debts. You must submit a repayment plan to the court for approval. Your repayments are supervised by a trustee appointed by the Bankruptcy court. If you cannot keep up with your payment plan, your Bankruptcy can be converted to a ch. 7.
There are connections between bankruptcy and other aspects of my practice, namely civil litigation and criminal defense. Usually when things start going bad for families or individuals, it goes there fast. I have defended someone in a criminal case, or filed a civil complaint for them, only to see them on my doorstep months later in dire financial shape, and in need of bankruptcy counseling. Again, for some, this option makes sense.
However, I take great pride in talking some clients out of bankruptcy when I think there are other options. Bankruptcy is still serious business, although the stigma has been taken off of it, to a large extent by the present state of affairs. For some, I can arrange settlement offers to creditors at 20-30 cents on the dollar; allowing those clients to pay their debt and move on, without a bankruptcy. Again, it is a tool provided by the federal government to help people, not cast them into an abyss of financial ruin.
If you are being harassed by creditors, facing eviction, wage garnishment, repossession or foreclosure, you may be able to file bankruptcy to put all of this on hold, and potentially, behind you!
Contact our office today to speak to one of our experienced bankruptcy attorneys to discuss your personal matter. At Stealey Law Group, our legal professionals are devoted to assisting you in working through this complicated area of law. Please contact us for a free case evaluation and assessment of your personal matter; call today to: 714/270-9123!