Debtor’s Bankruptcy Represenatation:
Filing bankruptcy can help a person by discarding debts or by confirming plans to repay debts. A bankruptcy case begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity. All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.
There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.
- Individuals may file Chapter 7 or Chapter 13 bankruptcy, depending on the specifics of their situation.
- Municipalities—cities, towns, villages, taxing districts, municipal utilities, and school districts may file under Chapter 9 to reorganize
- Businesses may file bankruptcy under Chapter 7 to liquidate or Chapter 11 to reorganize.
- Chapter 12 provides debt relief to family farmers and fishermen.
- Bankruptcy filings that involve parties from more than one country are filed under Chapter 15.
One of the primary purposes of bankruptcy is to discharge certain debts and to give an honest but unfortunate individual debtor a “fresh start.” The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
Chapter 7 Bankruptcy:
Chapter 7 Bankruptcy is also known as “liquidation,” or “complete bankruptcy,” and is the most commonly filed form of bankruptcy among individuals. Chapter 7 Bankruptcy discharges most debts and allows the debtor to have a fresh start.
When a Chapter 7 Bankruptcy has been filed, an automatic stay goes into place which prevents most creditors from implementing any collections unless authorized by the Court. A Chapter 7 Trustee reviews the schedules of assets and liabilities and collects the debtor’s nonexempt assets, which are then liquidated and reduced to cash. Any proceeds generated by Trustee are then distributed to the creditors in accordance with bankruptcy law. A Debtor gets to keep exempt assets which are governed under state and federal laws that allow you to keep certain property in bankruptcy.
In most Chapter 7 Bankruptcy cases, three to six months after the Petition Date, the debtor receives a discharge releasing him or her from personal liability for certain dischargeable debts. You should consider a Chapter 7 Bankruptcy if there is no hope in repaying any of your debts, there are no cosigners involved, or if court action by creditors is imminent. Businesses that wish to liquidate their assets and discontinue business may also file under Chapter 7 Bankruptcy.
You might not be eligible for a Chapter 7 if you can’t pass the means test which is a comparison of your income to expenses to determine whether you could afford a Chapter 13 repayment plan. If the court denies eligibility, you still may have the option to file for Chapter 13 bankruptcy.
Chapter 13 Bankruptcy:
Chapter 13 Bankruptcy is an adjustment of debts of individual with regular income and is designed for an individual who has a regular source of income, a desire to pay his or her debts, but currently is unable to do so. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” (1) If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. The Court must then approve this plan. During this time the law forbids creditors from starting or continuing collection efforts including lawsuits, wage garnishments, and actual contact with the debtor for the life of the plan. Upon completion of the plan, any remaining debts are discharged.
Chapter 13 Bankruptcy may be preferable to Chapter 7 Bankruptcy because Chapter 13 Bankruptcy usually allows the debtor to keep valuable assets such a home while curing delinquent mortgage payments during the life of the plan and saving it from foreclosure. A debtor may also keep non-exempt assets.
You may consider filing a petition under Chapter 13 Bankruptcy if you owe debts that are not dischargeable under Chapter 7 Bankruptcy, such as taxes and child support, or if you have liens that are larger than the value of the assets securing the debt, you have years of unfiled taxes, you are behind or car or house payments, or your assets are worth more than the available exemptions.
Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household’s financial position.
Chapter 11 Bankruptcy:
Chapter 11 Bankruptcy is a Reorganization Chapter and primarily applies to commercial enterprises that wish to continue business operations while repaying creditors through a court-approved reorganization plan or it is a default chapter for high-income individuals. This Chapter places the debtor in possession in the position of a fiduciary, with the rights and powers of a chapter 11 trustee while the U.S. trustee monitors the progress of a chapter 11 case and supervises its administration.
Under Chapter 11 Bankruptcy, the debtor has the right to file a written disclosure statement and a plan of reorganization within 120 days after the Petition Date (the “Exclusivity Period”) if the case is a small business case and 180 days to get a plan confirmed. Competing plans may be filed by competing creditors or the creditors’ committee after that period. The contents of the plan must include a classification of claims and must specify how each class of claims will be treated under the plan. After the disclosure statement is approved by the court and the ballots are collected and tallied, the court will conduct a confirmation hearing to determine whether to confirm the plan.
The debtor has a number of options under Chapter 11 restructuring process. These options include reducing debts by repaying a portion of them while discharging others (“bifurcation”), rejecting contracts or leases, and modifying contract terms as to length and interest. In order to confirm the plan, the court must find that the plan is feasible, it is proposed in good faith and the plan is in compliance with the Bankruptcy Code requirements. Upon conformation of the plan of reorganization, the debtor is required to make plan payments and is bound by the provisions of the confirmed plan. The confirmed plan creates new contractual rights, replacing or superseding pre-bankruptcy contracts. A Debtor may also choose to liquidating the business under a Chapter 11.
In the case of individuals, chapter 11 bears some similarities to chapter 13. For example, property of the estate for an individual debtor includes the debtor’s earnings and property acquired by the debtor after filing until the case is closed, dismissed or converted; funding of the plan may be from the debtor’s future earnings; and the plan cannot be confirmed over a creditor’s objection without committing all of the debtor’s disposable income over five years unless the plan pays the claim in full, with interest, over a shorter period of time.
CREDITORS’ BANKRUPTCY REPRESENTATION
While we handle Debtor’s bankruptcy filings, our firm also represents creditors in bankruptcy cases. We understand the bankruptcy process and utilize our experience to protect creditor’s interests in Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy proceedings. Our firm works with creditor committees and bankruptcy trustees during the pendency of a bankruptcy case. We practice in Bankruptcy Courts in the States of Texas and Oklahoma.
We understand that inaction in a Bankruptcy case may result in the loss of the right to recover assets or right to receive current or future distributions. Our firm strives to preserve assets and their respective values and seek the most favorable treatment in the bankruptcy courts for the benefit of our clients. Our firm offers the following services:
- Filing Motions from Relief of Stay.
- Preparing Reaffirmation Agreements.
- Filing Objections to Confirmation in Chapter 11, 12, and 13 Cases.
- Filing Motions for Adequate Protection.
- Filing Proofs of Claim.
- Filing Responses to Objections to Creditor’s Proof of Claim.
- Filing Motions for Valuation.
- Filing Adversary Complaints Contesting Dischargeability.
- Initiating Preference Litigation.
- Filing Motion to Dismiss.