| | If you pick up a ball, a bat and a glove, pretty soon the rules of the
game of baseball come into play.
 It is no different when creditors and debtors wrangle over
their differences. Like it or not, the "B" word is
mentioned. No one ever wants to file bankruptcy, however, in
the presence of financial difficulties the solutions available through that
division of federal courts are so pervasive that they need to be clearly understood.
- A wise man once said, "the worst thing that can happen to anyone who has developed financial problems is
not to use the best possible
solution to those problems." Having to file once is shameful. Twice is unnecessary. It is all about knowing your options, and choosing the best approach
possible under the circumstances. It is far a worse failing, to
become insolvent a second time after financial troubles arise by not seeking out
and taking the best way out.
A little bit of knowledge is a dangerous thing, but that
should by no means deter the first step in gaining understanding. 
Life is
complicated. The information provided here is not intended to substitute
for good legal advice from someone with an overall understanding of the insolvency
process. What follows is not an exhaustive treatment. It is not
intended to be. It is a starting point. Good decisions
are made by informed clients.
Possible options are described here, with a separate, more detailed
web page, dedicated to each choice, linked to the descriptions that follow. More
detail is contained in the pages linked through the navigation bars at the left and at the bottom of this
page.
Generally the choices are to work things out without an
actual bankruptcy (the effects of a bankruptcy, however, often dictate terms),
or to seek relief under one of the four popular operative chapters of the
bankruptcy code: Chapters 7, 11, 12, or 13.
HOW
TO OBTAIN
RELIEF
OF AN INDIVIDUAL'S
CURRENTLY
UNMANAGEABLE DEBT
- Leave town without a forwarding address.
- Sell assets and pay debt.
- Find an angel.
- Work out a voluntary composition or extension.
- Force an extension (Chapter 13).
- Liquidate and pay only liquidation value (Chapter
7).
- File Chapter 11 - any or all of the above.
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HOW TO REORGANIZE A
BUSINESS
- Ignore the problem.
- Sell out.
- Find an angel.
- Work out a voluntary composition or
extension.
- File Chapter 11:
- Can involve any or all of the above,
- Leverage composition,
- Time to sell by the stay of creditors.
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Please note that borrowing money is not on
either list.
-
- Workouts
-
Many times actually filing bankruptcy can be avoided. Something as simple as the sale of assets may be all it takes.
Often the threat of bankruptcy is all it takes. Having a good
bankruptcy attorney in your corner can be a comfort through out
this process. For more information, click Workouts
- Chapter 7 or "Straight"
Bankruptcy
-
-
Basic. Relatively inexpensive. Simple. By far
the most predictable and certain. A debtor simply gives over to
a trustee all of his, her, their, or its non exempt assets, and gains a
court order that denies creditors all lawful remedies whereby they
may have collected legitimate debts. With a little planning non
exempt property can be lawfully minimized.
-
The
majority of chapter 7 debtors have no administrable assets. The
key to chapter 7 is to take all necessary, lawful, action to minimize
the possibility of administrable assets. Call it negative estate
planning. Chapter 7
-
- Chapter 13 Bankruptcy
-
The federal law which makes bankruptcy possible has more than
one chapter describing potential relief for debtors. Relief
under each operative chapter is different. By requesting relief
under Chapter 13, individuals with regular income are able to avoid
giving up non-exempt property. Congress prefers this form of
relief and over the years has added to its attractiveness in several
ways. A Chapter 13 discharge is broader than a Chapter 7
discharge. For instance, C13 will discharge damages awarded as a
result of intentional wrong doing where a C7 will not.
Most frequently, C13 is used to catch up on secured loan arrearages
(home or car), or to buy collateral at its value in lieu of loan
payoff. Chapter 13
- Chapter 12 Bankruptcy
-
This operative chapter applies only to persons or entities
engaged in agriculture. It resembles Chapter 13, with higher dollar
limits. There is an eligibility test based on last year's tax
return. Roughly 50% of a prospective debtor's income must have
been from agricultural related activities. Chapter 12
Chapter 11 Bankruptcy
This is the most expensive relief in most cases. It allows a
qualified entity to gain protection from the bankruptcy court and its current
operators to continue to manage the business for their benefit and possibly
that of creditors. There are many complications involved. This
office prides itself on the number of successful reorganizations it has
completed over the years.
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