Should I File a Chapter 13 Just to Pay My Attorney’s Fees? One Court Says No

A recent Massachusetts bankruptcy court case has ruled against “attorney fee only” Chapter 13 bankruptcy plans. Now, as a Missouri bankruptcy attorney, I am always following the court activities of other states because it might have an influence on how bankruptcy law in Missouri works. You see, law isn’t set in stone–it actually evolves and changes with every case, judgment, and holding. So, here is what this new Massachusetts ruling says.

The case in Massachusetts banned a practice which involved attorneys who filed Chapter 13 bankruptcies for the purpose of paying attorney’s fees through the chapter 13 payment plan.

Why did this situation arise in the first place? These attorneys had their clients file Chapter 13 bankruptcies so they could try to pay their fees over a long amount of time because the clients didn’t have enough money to pay the Chapter 7 fees upfront. The Judge ruled that filing a Chapter 13 for the sole purpose of paying attorneys fees was not in “good faith” if the client was better suited for a Chapter 7.

Wait, let’s back track. What makes a Chapter 7 different than a Chapter 13? A Chapter 7 gets rid of “unsecured” debt allowing debtors to eliminate credit card debt, medical bills, payday loans and other unsecured debts. Sometimes there are exemptions, but for the most part, Chapter 7 bankruptcies are intended for people without many assets, but have a lot of debt.

On the other hand, a Chapter 13 bankruptcy allows protection from foreclosure and other actions of your creditors with an affordable payment plan that lasts for usually 3-5 years and bundles all of your debts together. The good thing about a Chapter 13 bankruptcy is that for people with a lot of assets, such as a home, are able to keep them.

Now, both Chapter 7 and Chapter 13 provide immediate protection from creditors. This means that harassing creditor calls, wage garnishments, and threats to your property can finally end. However, as you can see, Chapter 7 and Chapter 13 are meant to help two entirely different kinds of debtors. Advising someone to file a chapter of bankruptcy that isn’t right for their situation could leave them without a real fresh start. The debtors in this situation probably won’t be able to get through a Chapter 13–because their income and debt were more appropriate for a Chapter 7. The judges issued a ruling to help the debtors from having their new start fall apart.

The most important thing to do is to find the best bankruptcy attorney you can who will advise you on the most prudent options. What is a good way to look for a bankruptcy attorney? Look for someone willing to provide you with all the information you need to know beforehand–so you can also make an informed decision about your bankruptcy. What does that mean? Nothing other than that a bankruptcy lawyer is experienced and proves her experience in multiple publications online and off.

Each individual bankruptcy case needs to be evaluated to decide if a Chapter 13 or chapter 7 is the best choice, and a good bankruptcy lawyer will tell you why. The best bankruptcy attorneys will make sure to recommend whichever one is best for you–not for their own pocketbook.

This is what you should understand about an attorney fee only Chapter 13 bankruptcy: they are probably not in your best interest if you are better off filing a Chapter 7.

About Chapter 7 Bankruptcy

In Chapter 7 — which some people call “straight bankruptcy” but is more accurately called a “liquidation” case — you essentially give up all of your assets, and in return you get out of all of your debts. This is a gross oversimplification, of course, but it illustrates the difference between Chapter 7 and Chapter 13. A Chapter 13 case is designed for a wage earner who has the means pay at least some amount of money toward her debts, and it provides for a debtor to create a Plan to repay part of her debts back over a period of time — usually 36 or 60 months, depending on the debtor’s situation. In Chapter 7, you just walk away.

Of course, you don’t give up “all of your assets” in Chapter 7. Certain assets are exempt, which means that you get to keep them. For example, people in California who don’t own a homestead (or if their home has no equity) can claim “wild card” exemptions of just over ,000. This means that the first ,000 of your assets cannot be taken in Chapter 7 – and that doesn’t even include retirement accounts. Most of our clients do not have to worry about giving up anything in Chapter 7.

Similarly, you aren’t relieved of all of your debts either: some debts, like student loans, can almost never be discharged. Others, like income taxes, can be discharged under limited circumstances. And debts that have arisen due to fraud or intentional tort (like, for example, the O.J. Simpson civil judgment) are generally nondischargeable.

A Trustee will be appointed to your case. The trustee is in charge of your “bankruptcy estate” and technically controls all of your assets while you are in bankruptcy. The trustee will determine whether you have any non-exempt assets, and, if you do, will liquidate those assets and distribute the proceeds to your creditors.

A discharge is an order entered by a U.S. Bankruptcy Court Judge that forever prevents creditors from taking any action to collect on your personal liabilities existing at the time you filed for bankruptcy. The discharge is the order that you want and is the reason why you file bankruptcy. In most cases it takes 4-5 months from the time of filing until you receive your discharge. The judge will issue a discharge after the Court determines that you qualify for a Chapter 7 discharge. Usually you do not have to appear in front of the judge in Chapter 7.

Certain requirements must be met for filing in Chapter 7. You may not be permitted to file under Chapter 7 if you have enough money after meeting expenses to repay your unsecured creditors.  In that case a Chapter 13 bankruptcy may be appropriate. Other requirements exist but listing them would make this FAQ too large.
Most of my Chapter 7 clients don’t pay or give up anything in liquidation because they don’t have anything to begin with. When my clients do have assets that they want to keep through bankruptcy, and those assets cannot fit into an exemption, we usually encourage those clients to consider Chapter 13.

In Chapter 7, you are generally allowed to keep assets that secure a loan (like for a car or home) provided that you are current on the payments. You will have to surrender or catch up the payments on a secured asset if you want to keep it in Chapter 7.

Chapter 7 is generally the simplest and most streamlined of the forms of bankruptcy that consumers might consider. It takes less time and costs less in attorney’s fees, but Chapter 7 has limitations. Chapter 7 will not be right for you if you earn too much money, have an ability to repay your debts (even if just a small amount), or if you are behind on your home or car and want to keep it. And if you want to make use of an option in bankruptcy such as redemption – repaying the fair market value of a vehicle or home instead of what you owe – you will definitely want to examine the benefits of repaying over 3 or 5 years in Chapter 13 before you consider filing Chapter 7.

Chapter 7 is the best alternative for a lot of people. Although you can file Chapter 7 without an attorney – the forms are readily available – I strongly discourage this practice because it is easy to make a mistake in  your disclosures or exemption elections that costs much more than the lawyer would have cost in the first place.

Disclaimer: This is general knowledge and not legal advice. Please consult a professional in your jurisdiction for advice specific to your situation.

Basic things included in Bankruptcy Chapter 13

Are you facing any difficulty regarding paying of your debts to your creditors? Then you don’t have to worry at all because Chapter 13 Bankruptcy is there. You will become able to pay your debts by filing Bankruptcy Chapter13.

Before filing for Berkeley Bankruptcy Chapter 13, you should know what Bankruptcy Chapter 13 is? Well, Bankruptcy Chapter13 is said to be a beautiful way of paying back your debts without selling or mortgaging your property. It is also known as reorganizing Bankruptcy. Under Bankruptcy Chapter13, a person got enough time (i.e.3 to 5 years) for paying off the credits back.

Bankruptcy is applicable for the debtors who have a regular income and they can afford to request for such adjustments. The entire process is carried out under the supervision of the court. The Bankruptcy court provides definite time in which a person has to pay back the money but the main advantage of it is that one can’t loose his property.

The one advantage of chapter13 over chapter7 bankruptcy is full discharge option which is not applicable under the chapter7 filing. The other advantage of the chapter13 filing is that the repayment can be created even if the creditor disagrees it as long as it is approved by the court. A person filing for Bankruptcy Chapter13 must have regular income. A person can only file if he has regular income. Filing for Bankruptcy Chapter13 involves following steps:

Prepare the budget, determine the best solution for you, devise a chapter13 plan and fill out the forms, pay the filing fee and complete the process of filling the forms and pleading, obtain the discharge once the payment all have been made and the plan terminated. Chapter13 bankruptcy can help you to improve your financial situation. Bankruptcy law is different from state to state so it’s important that you can discuss your case with the local bankruptcy attorney.

As per the law the creditors must adhered the repayment plan approved by the court. They are in fact prohibited to collect any claims from the debtors. Chapter13 bankruptcy is proving to be very helpful in solving the financial crises. In some cases, people may involve a trustee who would take care of disbursing money to creditors as per the plan The stage of paying a trustee who then pays creditors as in chapter7 bankruptcy is usually eliminated with the chapter13 bankruptcy. In addition to federal exemption such as each state have different exemptions that apply to bankruptcy cases. If the debtor manages to complete all the necessary payment to plan, he is given full plan discharge.

Chapter 11 bankruptcy

viagra the recent global recession many banks and renowned companies applied for bankruptcy because it was hard to swallow the continuing loss. The stocks and the real estate nose dived. The gloom in the market reduced the sales and it resulted in huge loss to the business. In such circumstances, there was no other option for these companies but to seek bankruptcy. There are several ways of applying for bankruptcy. The most preferred course of bankruptcy application is to file it under Chapter 11 of the Act.

What is Chapter 11?

In the normal course, after drawing the balance sheet if the liabilities are more than the assets of the company, then the personal assets of the applicant may also be at risk and they may be used to clear the debts. But when application is filed under Chapter 11 by the corporate sector, partnership and the sole proprietorship concerns, the personal assets are spared. This comes as a great relief to the applicant. Further, the company is allowed to continue in business so that it can make one more effort to revive the business and make an action plan to clear the debts. But normally individuals are not allowed to file bankruptcy under Chapter 11.

Exceptions:

Apart from the individuals, large business segments like the insurance companies are not allowed to file bankruptcy under Chapter 11. They have to follow a different procedure as set out in the relevant Act. In such cases, even the federal government would be a party.

Importance of Chapter 11:

Some financial analysts say that Chapter 11 is too liberal and can be misused. The aim of Chapter 11 is to give an opportunity to the business to revamp itself instead of closing down and putting the employees and the share holders in hardship. The government thinks that there is always an opportunity for the business to do well and grow. In some countries the authorities allow the company to change the top management of the company so that the new team could put the business on track. In such cases, care is taken to appoint a team which has the necessary experience and expertise in managing the business. Therefore these eligible sectors always file the bankruptcy application under Chapter 11.

Learn the Bankruptcy Basics from a Los Angeles Bankruptcy Lawyer

Bankruptcy: Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies.” Under this grant of authority, Congress enacted the “Bankruptcy Code” in 1978. The Bankruptcy Code, which is codified as title 11 of the United States Code, has been amended several times since its enactment. It is the uniform federal law that governs all bankruptcy cases.

The procedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the “Bankruptcy Rules”) and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases. The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses.

There is a bankruptcy court for each judicial district in the country. Each state has one or more districts. There are 90 bankruptcy districts across the country. The bankruptcy courts generally have their own clerk’s offices. You can find a list of California Bankruptcy courts in our articles section.

The court official with decision-making power over federal bankruptcy cases is the United States bankruptcy judge, a judicial officer of the United States district court. The bankruptcy judge may decide any matter connected with a bankruptcy case, such as eligibility to file or whether a debtor should receive a discharge of debts. Much of the bankruptcy process is administrative, however, and is conducted away from the courthouse. In cases under chapters 7, 12, or 13, and sometimes in chapter 11 cases, this administrative process is carried out by a trustee who is appointed to oversee the case.

A debtor’s involvement with the bankruptcy judge is usually very limited. A typical chapter 7 debtor will not appear in court and will not see the bankruptcy judge unless an objection is raised in the case. A chapter 13 debtor may only have to appear before the bankruptcy judge at a plan confirmation hearing. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee. This meeting is informally called a “341 meeting” because section 341 of the Bankruptcy Code requires that the debtor attend this meeting so that creditors can question the debtor about debts and property.

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision:

[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). This goal is accomplished through the bankruptcy discharge, which releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts. This publication describes the bankruptcy discharge in a question and answer format, discussing the timing of the discharge, the scope of the discharge (what debts are discharged and what debts are not discharged), objections to discharge, and revocation of the discharge. It also describes what a debtor can do if a creditor attempts to collect a discharged debt after the bankruptcy case is concluded.

Six basic types of bankruptcy cases are provided for under the Bankruptcy Code, each of which is discussed in this publication. The cases are traditionally given the names of the chapters that describe them.

Chapter 7, entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed. Amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a “means test” to determine whether individual consumer debtors qualify for relief under chapter 7. If such a debtor’s income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief.

Chapter 13, entitled Adjustment of Debts of an Individual With Regular Income, is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep a valuable asset, such as a house, and because it allows the debtor to propose a “plan” to repay creditors over time – usually three to five years. Chapter 13 is also used by consumer debtors who do not qualify for chapter 7 relief under the means test. At a confirmation hearing, the court either approves or disapproves the debtor’s repayment plan, depending on whether it meets the Bankruptcy Code’s requirements for confirmation. Chapter 13 is very different from chapter 7 since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Chapter 11, entitled Reorganization, ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. The chapter 11 debtor usually has the exclusive right to file a plan of reorganization for the first 120 days after it files the case and must provide creditors with a disclosure statement containing information adequate to enable creditors to evaluate the plan. The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. Under chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.

Chapter 12, entitled Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income, provides debt relief to family farmers and fishermen with regular income. The process under chapter 12 is very similar to that of chapter 13, under which the debtor proposes a plan to repay debts over a period of time – no more than three years unless the court approves a longer period, not exceeding five years. There is also a trustee in every chapter 12 case whose duties are very similar to those of a chapter 13 trustee. The chapter 12 trustee’s disbursement of payments to creditors under a confirmed plan parallels the procedure under chapter 13. Chapter 12 allows a family farmer or fisherman to continue to operate the business while the plan is being carried out.

Chapter 9, entitled Adjustment of Debts of a Municipality, provides essentially for reorganization, much like a reorganization under chapter 11. Only a “municipality” may file under chapter 9, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts.

The purpose of Chapter 15, entitled Ancillary and Other Cross-Border Cases, is to provide an effective mechanism for dealing with cases of cross-border insolvency. This publication discusses the applicability of Chapter 15 where a debtor or its property is subject to the laws of the United States and one or more foreign countries.

In addition to the basic types of bankruptcy cases, our Bankruptcy Basics section provides an overview of the Servicemembers’ Civil Relief Act, which, among other things, provides protection to members of the military against the entry of default judgments and gives the court the ability to stay proceedings against military debtors.

This publication also contains a description of liquidation proceedings under the Securities Investor Protection Act (“SIPA”). Although the Bankruptcy Code provides for a stockbroker liquidation proceeding, it is far more likely that a failing brokerage firm will find itself involved in a SIPA proceeding. The purpose of SIPA is to return to investors securities and cash left with failed brokerages. Since being established by Congress in 1970, the Securities Investor Protection Corporation has protected investors who deposit stocks and bonds with brokerage firms by ensuring that every customer’s property is protected, up to 0,000 per customer.

The bankruptcy process is complex and relies on legal concepts like the “automatic stay,” “discharge,” “exemptions,” and “assume.” Therefore, you can find in our articles section a glossary of Bankruptcy Terminology which explains, in layman’s terms, most of the legal concepts that apply in cases filed under the Bankruptcy Code.

Understanding Chapter 11 Business Bankruptcy in Arizona

In times of economic upheaval, the greatest tragedies are those businesses that are forced to close their doors after years of being an established and productive contributor to the community’s economic landscape. And one of the most difficult decisions both small business owners and high profile CEOs alike share is whether or not to file for business bankruptcy. For many Arizona business owners, filing for business bankruptcy is akin to waving the white flag of failure and they’re afraid that they’ll be personally and professionally ruined by doing so. But, as you’ll see, this isn’t always the case.

What is Chapter 11 Business Bankruptcy?

Business, much like life, is full of ups and downs. Many businesses are prepared to handle the inconsistencies of the marketplace, but not all of them are. For some, the financial burden of trying to operate a successful business continues to grow, and with increased debt, stress and worry also escalate.

This is where a Chapter 11 business bankruptcy in Arizona can help. In Chapter 11, businesses get to keep their doors open while debts are paid through a reorganization plan approved by the court.

With Chapter 11, your business can continue to make money, your employees can retain their jobs and salaries and you’ll receive the time you need to plan for the future of your business without the threat of creditors taking action against you.

Save Your Business in Arizona with Chapter 11 Bankruptcy

Each bankruptcy case is unique, but immediately upon filing for Chapter 11, there is an automatic stay imposed against your creditors. This ceases all collection activity (including evictions and garnishments), harassing phone calls, emails and other threatening forms of communication. By filing a Chapter 11, a business in trouble can protect their franchise and restructure their assets for a more profitable and manageable future.

Chapter 13 is one of the most common consumer bankruptcies today in America together with Chapter 7. These Chapters provide for the efficient payment of miss-managed debts in two different ways. Chapter 13, also known as the wage earners’ plan is in its most basic definition, a restructuring effort of your debts to let your expendable income eventually pay the whole amount of your financial obligations. Before you move on with filing under this, learn first some of Chapter 13 bankruptcy rules.

First of all, if your income less the daily living expenses amounts to zero, you cannot file for Chapter 13. You must have a definite expendable amount every month to settle your accounts with your creditors, though it is only a fraction of what they actually expect from you. Chapter 13 provides for the length of time which your debts are divided into. The longer that is, the better is your chance to manage the repayment scheme.

Do not intentionally refrain yourself from going to the court as this can affect your filing. You will also be not allowed to file for Chapter 13 if you received a credit counseling session from an authorized credit counseling group (one on one or group sessions) 180 days prior your actual filing.

Aside from the expendable income that is expected from you to file for Chapter 13, there are also limits to your incurred secured and non-secured debts. Your unsecured debts must be less than 0,475 and your secured debts less than ,081,400.

The court would need a lot of financial information from you the moment you decide to file under Chapter 13. Some of these are schedule of your schedule of current income and expenditures, schedule of executory contracts and unexpired leases and last but not the least, statement of financial affairs. You must also submit certificate of credit counseling and debt repayment plan developed from the same counseling. Evidence of payment from employers must also be provided together with the net income statement with possible income and expense increases after filing. These bits of information are all important in the decision of the court to deem you legible to claim bankruptcy under the covering of Chapter 13 provisions.

Needless to say, the court would also need the list of your creditors with the specific nature of their claims (to make sure the debt incurred is not of malicious origin). You must also submit the list of your properties. Chapter 13 does not involve itself to the liquidation process of your assets (as in Chapter 7). But you must comply to this requirement nevertheless. Chapter 13 bankruptcy rules are the foundation of a successful filing of your case. Learn from it and use it as an information resource for decision to file for it or not.

Whats The Difference Between Chapter 11 And Chapter 13 Bankruptcy

The stock market… oh the stock market!  Investing in the stock market is never easy, let’s face it it can be one of the hardest things in the world. And it can get much more complicated when a company that you have invested in suddenly declares that it’s having financial troubles that may lead it down the path to bankruptcy.

As somebody who’s invested in a company that is contemplating bankruptcy, you may be confused as to what your options are. There is much to consider and several actions that you can take and I’m going to talk about them in this article today.

First things first, let’s talk about the different forms of bankruptcy.  For the most part the company will either declare chapter 7 or Chapter 13 (which are basically the same thing), or they will declare Chapter 11 bankruptcy depending on a number of scenarios and of course on their current cash position and future financial viability.

So what’s the difference between Chapter 11 and Chapter 13 bankruptcy?

Chapter 13 bankruptcy (and from here on out I’m just going to refer to Chapter 13 and Chapter 7 as the same thing) means that a company is going to be liquidated, all of their assets are going to be sold, and the company will no longer operate as a viable public entity in any form. We’re talking oblivion here, complete and utter destruction.

The purpose of Chapter 13 is to sell everything in a company that can be sold and then to take that money and pay back creditors as much is possible. Unfortunately for you, shareholders are not considered creditors and are way down the food chain in the pecking order of who gets paid back.

For the most part bondholders will be paid off first, followed by creditors of the company including banks and suppliers and things of that nature. If all those people get paid off and there’s still money left over, it can go to the shareholders… but don’t hold your breath as I’ve never heard of any company who went through Chapter 13 bankruptcy that actually had money left over afterwords to pay back  shareholders.

Usually there’s not enough money to pay back even the bondholders.

Chapter 11, on the other hand means that the company is going to be re-organized through bankruptcy court under any number of different fashions and will most likely continue on as a public entity in some form or another.

In Chapter 11 bankruptcy, it is possible for shareholders to hold out through bankruptcy. After the company has been reorganized through the bankruptcy court then it may be possible for them to get their act back together and continue on as a viable company that makes money. If it does so, you can expect its share price to slowly increase in the future. But the thing about all that is it may take 3 to 5 years or longer for this to happen… if it happens at all.

Without a doubt Chapter 11 bankruptcy is better from the point of view of the shareholders. If you believe a company you have invested in will go down the Chapter 11 bankruptcy path it may be possible to you to hold onto your shares and eventually make some money again.

This involves many risks and a lot of time and you just may not want to mess with it. In which case your best bet is to simply sell the shares and cut your losses.

Ease Bankruptcy Filing Procedure with the Help of Chapter 13 Bankruptcy Lawyer in Atlanta

The present housing market, soaring medical costs and rising gas prices have sent many individuals and families into financial crisis. If you are unable to pay your mortgage, and creditors don’t stop calling, it is time you need to essentially seek advice from a chapter 13 bankruptcy lawyer in Atlanta.

Chapter 13 Bankruptcy, What Is It All About?

Chapter 13 Bankruptcy law enables individuals to repay some or all of their debts under a bankruptcy repayment schedule of 3-5 years. While Chapter 7 Bankruptcy involves liquidation of all unsecured debt, Chapter 13 Bankruptcy does not automatically discharge debts, but allow individuals to keep some of their belongings.

Filing for Chapter 13 Bankruptcy helps to stop home foreclosure repossessions, proceedings and end wage garnishments or creditor calls. In order to file Chapter 13 Bankruptcy, an individual should essentially have a constant source of income to meet bankruptcy repayment schedule requirements.

Working of Chapter 13 Bankruptcy:

With Chapter 13 Bankruptcy, individuals are required to create a bankruptcy repayment schedule and will require making the payment to the trustee. All the outstanding debts will be prioritized and paid according to the bankruptcy law. After opting for Chapter 13 Bankruptcy, debts will not be discharged instantly, but by the end of the bankruptcy schedule.

Why do you need Chapter 13 Bankruptcy Lawyer Atlanta?

Filing for personal bankruptcy has become more difficult with the new bankruptcy laws. By filing Chapter 13 Bankruptcy, many individuals who may be eligible for Chapter 7 Bankruptcy will now be forced to repay some or all of their debts.

Present bankruptcy is governed by centralized rules and regulations. Although you can file for bankruptcy on your own, it is always recommended to opt for Chapter 13 Bankruptcy Lawyer.

The Chapter 11 Bankruptcy Law

When a company is left with no choice but to declare itself bankrupt, it can do so under Chapter 7 of the bankruptcy law and get the federal government’s protection. In this process, the assets will be liquidized and the creditors will be paid off. A lot of companies prefer to do this, but there are certain companies that prefer filing under the Chapter 11 bankruptcy law.

In short, Chapter 11 bankruptcy is when the company asks the government for protection and does not choose to be dissolved and liquidized. The company will be protected partly or wholly from its creditors but will not be dissolved. The court will make a decision according to the debts a company has incurred. Under Chapter 11 bankruptcy, the creditors take over the entire company and run it.

The underlying principle that is behind Chapter 11 bankruptcy is that when the assets belonging to the company are not sufficient to clear debts, the creditors fail to get their entire debt amount. Then the creditors take over the whole company because its value is more than its individual assets. In such cases, a company is said to be bankrupt under the Chapter 11 bankruptcy law. Here the owners that are the shareholders of the company lose their control over the company and then the court decides who should take over the functioning of the company.

Here the best thing is that the creditors receive more benefits and money under Chapter 11 bankruptcy than what they would generally have received under Chapter 7 bankruptcy. People working for the company that is filing bankruptcy do not lose their jobs. The assets are kept intact to produce profits.

Creditors registering in court get an opportunity to be heard during Chapter 11 bankruptcy. The creditors come up with a restructuring plan if the debtors do not have any proposal. This plan gives them a chance to take over the company. The shares of such companies are generally considered to be of no value, the owners suddenly are empty handed and have nothing.

The court has to confirm the creditors’ plan of restructuring. This means the court has to accept and approve it. Submitting a variety of restructuring plans is quite common under Chapter 11 bankruptcies. If no restructuring plan gets an approval from the court then the case is likely to be converted to Chapter 7 bankruptcy instead.

The creditors under Chapter 11 bankruptcy are given the same preference as those under Chapter 7. People who have secured debts are given preference. People who have collateral securities will be given first preference to receive payments.

The other thing is that until the first creditor receives his full payment and is satisfied, the next creditor in line will have to wait. Similarly as in the case of Chapter 7 bankruptcy, if a creditor has not registered within the limited time then he loses his chance. A second chance is given to a company under Chapter 11 bankruptcy.