Bankruptcy
Consumers and businesses finding themselves mired in heavy debt may consider filing for bankruptcy. Bankruptcy is a federal court process which can help consumers and businesses eliminate their debt or repay the debt while the bankruptcy court shields them from the collections process of creditors while the case moves through the court's process. Bankruptcies generally result in either "discharge" (wiping out debt) or "reorganization." Chapter 7 bankruptcies result in liquidation, while several other chapters deal with reorganization.A skilled bankruptcy lawyer can help you--or your business--determine which chapter you should file under, or whether you should file for bankruptcy at all.
Chapter 7
Under Chapter 7, a consumer or business can seek to eliminate ("discharge") debt. In exchange, the consumer's assets may be sold ("liquidated") by the court for the benefit of the creditors. As experienced bankruptcy lawyers, we can help you determine which assets will be exempt from liquidation and can advise you as to which debts, if any, cannot be discharged in the bankruptcy process so you can make an informed decision as to whether bankruptcy will help you start with a clean slate.Chapter 11
Businesses are permitted to reorganize under Chapter 11. Chapter 11 bankruptcy is available to businesses whether they are organized as a sole proprietorship or corporation. Generally, the debtor in a Chapter 11 bankruptcy case can restructure the business by acquiring new financing and by canceling or rejecting some kinds of contracts while protected from other litigation until the bankruptcy is resolved.Consumers with debt in excess of the amounts specified in Chapter 13 may also file for Chapter 11 bankruptcy.
Chapter 13
Chapter 13 bankruptcy is often used by consumers who need to reorganize their debt structure rather than seek to walk away from it entirely. Generally, consumers with secured debts under $871, 550 and unsecured debt under $290,525 can file under Chapter 13.Under Chapter 13, the debtor will propose a plan to repay the debts over the next three to five years. If the plan is confirmed and all the payments called for under the plan are made, the remaining debts will be discharged.