Personal Bankrupcy

Due to economic downturn many people are facing the problematic situation of not being able to meet all of their financial obligations. There are currently a multitude of companies that currently offer debt consolidation programs. The problem with most of these programs is that there is never a guarantee of success and many people end up in a worse position after these programs than when they began. At JMH Legal Group you will discuss your financial issues with an experienced attorney dedicated to helping you no matter what your specific problem is. If you would like to know what JMH Legal Group can do for you please complete and submit our free debt analysis form. You will receive a response from an experienced attorney within 24 hours.

Similar to a consumer bankruptcy, a corporate Chapter 7 bankruptcy can eliminate all of a corporation’s debts by a complete liquidation of assets.

Chapter 7 does not impose a maximum debt limit. Consequently, you can discharge any amount of debt. Further, it is a liquidation of debt; unlike a Chapter 13, you do not need to make any payment or create a payment plan. Chapter 7 bankruptcies are also shorter proceedings than Chapter 13, usually lasting no more than 6 months, as opposed to 3 to 5 years in a Chapter 13. Filing a Chapter 7 petition automatically stops most collection actions pending against the Debtor/petitioner: this includes wage garnishments, collection law suits, foreclosures, and even calls from bill collectors. A Chapter 7 discharge can eliminate all a petitioner’s debts. In order to qualify for a Chapter 7 discharge, however, the debtor will need to satisfy a means test- one of the criteria to qualify for a Chapter 7 discharge is the Debtor’s household income cannot exceed a certain sum, subject to certain exclusions. Debtors should consult with an attorney to determine whether they satisfy the means test, and whether Chapter 7 is their best choice.

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.) A chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. 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. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. 1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

Chapter 11 may be right for certain individuals with high assets, unsecured debt, and secured debt. Please inquire to find out if you qualify for the advantages of a Chapter 11 re-organization.