Bankruptcy
People and businesses get overwhelmed with debt for a number of reasons. For some, it may be because they found themselves in circumstances beyond their control. For others, it might have been plans made that were within their control, but things did not go as planned. And for many, it may be a little of both. For many, the sub-prime melt-down has pushed people into a financial condition they never predicted.
Whatever the reason, it leaves many feeling helpless and alone. There is also the confusion of simply not knowing where to turn and what to do. It is important to know that there are options, there are choices, and there is hope. Despite the sweeping changes to the US Bankruptcy Code in 2005, relief is still available.
Dealing with the debt has been stressful enough. Our job is to get our clients moving forward again by helping them through the bankruptcy process. To learn more about the bankruptcy services we can provide, please click on the links below.
Personal Bankruptcy | Business Bankruptcy | Adversary Proceedings
Personal Bankruptcy
Changes in expenses, rises in energy costs, and increasing monthly mortgage payments, a sudden job loss or family health crisis can hurt one’s bottom line. Sometimes just one can lead consumers to unmanageable debt. And with the bill collectors and their lawyers in hot pursuit it can make a tough situation even tougher.
We bring our deep knowledge of bankruptcy law as well as extensive experience in the U.S. Bankruptcy Courts to help our clients to make informed decisions. Successfully guiding our clients through the bankruptcy process is our goal.
Generally, there are two bankruptcy Chapters consumers use the most: Chapter 7 and Chapter 13, although some consumers can still use Chapter 11.
Before reading about these chapters, it is important to know about the protections afforded by any bankruptcy chapter: the automatic stay. When a bankruptcy petition is filed, Section 362 of the US Bankruptcy Code imposes a stay on all collection activities. Foreclosures must stop in their tracks; automobiles cannot be repossessed; and collection activities must cease. While the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made some significant changes to Section 362, the protections are still there for most debtors.
Chapter 7
A Chapter 7 bankruptcy, often called a “straight bankruptcy,” is a liquidation. In this situation, the debtor files a petition with the court, listing his or her debts, expenses, assets and income. Any property that is not exempt from bankruptcy is liquidated (i.e., sold off) to pay off the debts. If the debtor has no assets, the debts are simply wiped clean through a discharge.
What happens when I file?
Once you receive your credit counseling certificate, your petition (along with all of your other required supporting scheudles, statements and verifications) is filed with the bankruptcy court and assigned to a trustee on the Chapter 7 trustee panel. Usually, the trustee is a local lawyer. When you file bankruptcy, an “estate” is created and that estate is what collects property, sells it and gives the proceeds to creditors. The trustee represents the bankruptcy “estate” and is responsible for ensuring your petition is correct and accurate and that you are entitled to a discharge. The trustee also is responsible for collecting any non-exempt property, selling it and disbursing the proceeds to the creditors.
Within about 30 days, you meet with the Chapter 7 Trustee (along with your attorney) at what is called a “Meeting of Creditors” or a Section 341 meeting. Your attorney will be able to explain what you can expect at that meeting.
Assuming there are no issues that could delay the case, you will receive a discharge of your debts within a few months. This discharge releases you from your dischargeable debts – meaning you do not have to pay them. Bear in mind, it does not discharge you from debts that the US Bankruptcy Code declares as nondischargeable. After reviewing your case, we can determine whether there are debts that may survive your bankruptcy discharge.
How can I keep my property?
Property that is exempt from Chapter 7 bankruptcy may not be liquidated or sold to pay creditors. When we say “exempt” we mean that it cannot be sold to pay creditors, or more accurately, it is exempt from the bankruptcy estate. Federal and state laws protect some types of property for their full value. (For example, under state law, you can exempt an individual retirement account.) Other types of property, however, are protected only up to a certain amount.
Only a qualified and experienced bankruptcy attorney can determine what property may be exempted—and do so while trying to protect as much of your property as legally permissible. For more details on what specific property is or may be exempt in your case, please contact us.
Why would I want to file a Chapter 13 if I can file a Chapter 7?
Your attorney must evaluate many factors before making an informed and sound recommendation about which bankruptcy chapter is right for you. Income, debt/asset ratio and availability of exemptions are among the factors an attorney considers. The US Bankruptcy Code, and the ever-evolving case law will dictate what chapter will be best for you. Also, it’s important for you to know that if you are behind on your mortgage payments, and you want to file bankruptcy to avoid losing your house, Chapter 7 is probably not your best option. To learn about your options and see which bankruptcy chapter best fits your needs and financial circumstances, please contact us.
I am heading into foreclosure! Can I save my house?
This is not an easy question to answer without knowing a lot more and it is to depend on your unique circumstances. If you are many months behind in payments, you should probably consider Chapter 13. If you know you cannot afford your future mortgage payments, you might benefit from Chapter 7. But again, the only way you can know for sure is to meet with a bankruptcy attorney.
What about my credit? Won’t it be ruined forever?
Not necessarily. A bankruptcy is a derogatory mark on your credit report. However, so are credit counseling, charge-offs, missed payments, foreclosures and repossessions. If you’re contemplating bankruptcy, you probably have one or more of these items already on your credit report and your credit rating has been a affected.
Bankruptcy will stay on your credit report for 10 years. However, there are legitimate methods of reestablishing your credit, such as reaffirming a secured debt or obtaining a secured credit card. Using those accounts responsibly and paying the debts on time will eventually help you reestablish your credit.
Please be mindful that your ability to get credit depends both on factors within your control—and factors beyond your control, such as the economy, a credit crunch and job stability.
What information should I bring with me to my consultation?
To get the most out of your first consultation with us, you should have the following information:
• 6 months of pay stubs and income information,
• an estimate of your debt, both secured and unsecured (or just bring your bills
• an estimate of your monthly expenses, and
• information concerning all assets: real estate, automobiles, etc.
Our consultations are a two step process. Call our office to schedule an appointment. You will be asked to provide all contact information as well as a general description of the financial circumstances you find yourself in. At that point, a free telephone consultation is scheduled with Attorney McLeod.
During that consultation, Attorney McLeod will get more details about your situation to determine whether we can be of assistance. If we can, we’ll extend an invitation to an in-office consultation for a fee. We will also email you (or mail, depending on your preference) an short form for you to complete that gives us some basic information for us to work with at the consultation. At the in-office consultation, Attorney McLeod will hear all of the facts, review your documents, ask and answer questions, and discuss with you the process and your options.
What other information will I eventually need?
You will need copies of your tax records to obtain necessary information for your petition. This would include returns or if you do not have returns, transcripts from the IRS and the Massachusetts Department of Revenue. You will require an appraisal of your real estate or any other assets you have as well as copies of bank statements, including canceled checks. At the in-office consultation, you will be given a list of all documents that are required for proper planning of the bankruptcy case.
Why do I need a lawyer? Isn’t just paperwork?
There are document preparation services that will prepare the documents necessary for a bankruptcy filing for a lesser cost than what you would pay an attorney. However, they are forbidden by law to give you legal advice. The passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, imposed additional requirements on debtors that if not met can result in the case being dismissed. There are other duties debtors have, including disclosing important real estate documentation, income information, as examples. Perhaps most importantly, only an attorney can let you know what issues you can expect in your particular case, and how you can prepare for them.
It’s important to remember that bankruptcy is a choice and the decision to file is yours. But your decision should be an informed one. We will be sure that you get all of the facts, learn about the issues that could affect you so that your decision is an informed one.
If you are thinking about personal bankruptcy, please contact us.
Chapter 11
While businesses seek Chapter 11 bankruptcy protection, Chapter 11 is also available for individuals as well as small businesses. Whether Chapter 11 is right for you or your business situation depends on the unique circumstances of your situation.
Generally, most individuals struggling with debt will benefit more from a Chapter 7 or a Chapter 13. However, if you are considering Chapter 13, you can only have a certain amount of debt. If your debt threshold is higher than the allowed amounts, you cannot consider Chapter 13.
Chapter 11 can offer a person with high debt or a struggling business a a bit of breathing room to regroup and reorganize. No Chapter 11 is typical since every person and every business has their own unique reasons for being involved in the process.. To learn what Chapter 11 can do in your specific situation, contact us
Chapter 13
A bankruptcy filed under Chapter 13 is designed for people with regular income who want to or can pay their debts but are presently unable to do so at the rate their creditors want or expect. A Chapter 13 bankruptcy enables the debtor, under court supervision and protection, to propose and carry out a plan for repaying creditors over an extended period of time.
Who is eligible?
Corporations or partnerships are not eligible. However, people who are employed, sole proprietors and the self-employed are eligible. There are debt limits. Please contact us to see if you qualify.
What about interest payments and late charges? How does a Chapter 13 affect those?
A creditor must file a proof of claim with the bankruptcy court. This document states what you owe the creditor on the date you filed for protection. The amounts on the proofs of claim are incorporated into the repayment plan, and the plan payments are based upon these amounts. If a creditor does not file a proof of claim by the date the court establishes, it does not get paid and the debt is discharged at the end of a successfully completed plan. For most creditors, interest and late charges cannot be added to the amount stated on the proof of claim.
How long is the plan?
Plans can range from 36 to 60 months, depending on your particular situation. The length of your plan depends on the amount of money you make. This is also referred to as “the applicable commitment period.” We can explain what this means in your situation once your income has been evaluated.
I am heading into foreclosure! Can I save my house?
Chapter 13 can be used to stop a foreclosure and let you pay back what you owe to the mortgage company over time. It can also give you protection if you want to put your home on the market. Whether it can work for you will depend on the facts of your unique situation.
I’ve got too much debt! I can’t pay all of my debt in 36 or even 60 months! What can I do?
In a Chapter 13, you pay back your unsecured creditors (such as credit cards, utilities) at a percentage. Therefore, if you have $65,000 in credit card debt, you may be able to pay back only 10% or 20% over the life of your plan. When you are finished with your plan payments, any most of the remaining unsecured debt is discharged or erased.
Secured debt, such as mortgages and car payments, has different repayment rules and those rules are going to depend on the amount of secured debt you have.
What you get paid and who gets paid in what amounts depends on a number of factors. The most important factor is the income available. To learn more, please contact us.
What’s the catch?
There is no catch (although there are some additional facts and requirements we are happy to explain when we meet). Once you make the payments under the plan, the remaining obligations are discharged and you have your fresh start. The discharge has the effect of releasing you from your debts that were not paid in the plan.
Are all debts dischargeable?
No. Certain debts are not dischargeable, such as certain taxes, alimony, child support, student loans, are some of the examples of debts that are not discharged. For more information on how these rules apply in your situation, please contact us
If I cannot pay my mortgage, how can I afford an attorney?
That really is a good question, and fortunately, we have a good answer. One of the benefits of Chapter 13 is that a debtor may be able to pay some, and in some cases most, of the fees and costs associated with filing Chapter 13 as part of the Chapter 13 plan that is discussed above. Ask us for more information on how this works.
It sounds too easy!
There’s no way you can learn about all the benefits as well as your rights and obligations under Chapter 13 in a website. Every person has unique circumstances than an attorney must evaluate. To find out whether it is the best option for you, please contact us.
Business Bankruptcy
For many reasons, business may face serious cash flow issues at one point or another. Sometimes, businesses make regrettable decisions. Other times, customers may have made some bad decisions that strain the bottom line of the business. Pressures from vendors and creditors can make the mounting pressures even worse.
Many businesses, especially those 10 years and younger, started with personal guarantees on certain debts. As a result, the financial concerns of struggling business owners can extend beyond their own business. Indeed, it is not uncommon for personal assets and finances to be at risk.
For businesses in financial distress, bankruptcy may be the best option. Some businesses seek bankruptcy protection under Chapter 11 while they reorganize – giving themselves a little breathing room. Others may use Chapter 7 to wind down operations, get assets efficiently liquidated, and allow the owners to move on.
No matter what the situation or what chapter might work best, business bankruptcies can be complex, especially if they involve issues of unpaid wages, benefits, deposits on services or merchandise, or fiduciary tax contributions and payments. In these situations, you need competent counsel who will give you straight answers, guide you through the process and give you the tools and information you need to move forward.
To learn more about what we can do for your business, please contact us.
Required legal notice: We are a Debt Relief Agency as is defined in 18 USC Section 101 of the US Bankruptcy Code. We assist people who file for bankruptcy protection.
