Bankruptcy is the process, protected by the United States Constitution, that allows people or organizations to divest themselves of insurmountable and overwhelming debt. In the words of the US Code, the process is designed to give, “the honest but unfortunate debtor… a new opportunity in life and a clear field for future effort.” This is accomplished by discharging certain debts, depending on circumstance, and in some cases assisting the debtor in the reorganization of businesses and repayment of non-dischargeable debts. The particulars of each case vary with the type of bankruptcy being filed and from case to case. This article is designed to give a clear overview of the bankruptcy process, but filing should be done under the advisement of an experienced lawyer.
Sometimes mortgage companies just don’t pay attention to the laws. Even if you file a Chapter 13 bankruptcy to stop a foreclosure, the mortgage company will often keep on tacking on illegal fees and costs. This inflates the balance on your mortgage, making it impossible to keep up with payments — and forcing you deeper and deeper into the foreclosure sinkhole.
That’s why at Crawley Law Firm we know that Chapter 13 filing is a powerful tool to stop the sale of a home in foreclosure — but it’s just the beginning of the work needed to protect our clients.
We at Crawley Law Firm not only want to help you get out of debt by offering a free consultation to see if bankruptcy is an option for you, but also want to help you recover from it.
Filing bankruptcy is an opportunity to start fresh financially and we offer 14-week credit rebuilding program called “7 Steps to a 720.”
This program teaches you how to improve your credit rating over a 6-12 month period of time.
When your Chapter 7 bankruptcy case is filed, a trustee is appointed by the court. This trustee – who may or may not be a lawyer – is responsible for reviewing your bankruptcy papers to be sure that you have not hidden anything, did not lie, and made all required disclosures.
You will be called for a meeting of creditors within 4-6 weeks of when the case is filed. This is a very informal meeting with the trustee, and takes about 10-15 minutes. You will be asked a series of questions about your case, and the trustee will review the documents that have been filed with the bankruptcy court.
Chapter 11 bankruptcy is a very complex area. Luckily, most people who file for bankruptcy in Arkansas do not need Chapter 11 bankruptcy. You can read more about Chapter 11 below; however, in most situations, filing Chapter 11 is overkill for all but the most specialized of circumstances. If you want to learn more about your options, call Crawley Law Firm, P.A. at (870) 972-1150.
Chapter 11 is a type of bankruptcy usually filed by businesses, but also available to individuals under specific circumstances. If an individual has assets in excess of the requirements to file Chapter 7 bankruptcy or has debts too high for Chapter 13, it may be appropriate. If you and your lawyer decide to file Chapter 11, this article will provide an overview of the steps and timeline of the process.
Filing For Protection From Creditors
Under a Chapter 11, once the petition is filed, the court grants what’s called an “automatic stay.” This means that all collection attempts must immediately end. This gives the debtor relief from calls, letters, and other efforts to collect on the debt. Foreclosures are automatically halted as well. This stay lasts until the reorganization plan is approved by the court. Usually a period of four months is given to develop this plan, but in some cases the courts may extend that time up to 18 months.
Developing A Reorganization Plan
Next, the petitioner and their lawyers will make a plan to repay the debt and reorganize the business in a way that allows them to continue business operation while cutting expenses (and, in some cases, liquidating assets) in order to do this. The end goal of this plan is to serve as a contract between the debtor and the creditor, spelling out how the business will be run during the repayment period. The creditors do have the right to propose alternative plans if they are unhappy with the terms of one proposed by the debtor. This is rare in Chapter 11 filing and it’s more likely that the creditors would move to have the bankruptcy re-filed as Chapter 7.
Waiting On A Plan Confirmation
The plan must be approved by the bankruptcy court, and this is referred to as “confirmation.” When making this determination, the courts are looking to make sure the plan is likely to work, submitted in good faith, and in the best interests of the creditors. This last issue is a little complicated, but it usually means that the creditors must receive at least as much as they would under Chapter 7 bankruptcy.
Securing A Discharge of Debt
At the end of this process, which usually takes between three and five years, the remaining debts will be dismissed. This is called “discharge” and it only occurs if the debtor has acted in accordance with the reorganization plan, including paying down the debts as specified.
As with any other kind of bankruptcy, not all debts are subject to being discharged. Debts for alimony, child support, some kinds of tax debt and others will not be relieved by the filing.
For small businesses, the timeline of events is shortened, and some of the details of the process change. In fact, of all the bankruptcy options, Chapter 11 has the most variables. Each plan is individually tailored to the financial situation of the debtor, so it can be very complicated. It is important to approach this option with the help of a skilled and experienced lawyer to ensure it is the appropriate option for filing.
Contact us online or call 870-972-1150 to start the process. Set up a free, no-obligation consultation appointment with an experienced Arkansas bankruptcy lawyer.
Chapter 13, commonly referred to as a “wage earner” bankruptcy case, involves a reorganization of your finances to allow you to pay back some or all of your debts over a period of time.
Chapter 13 does NOT require you to repay all of your debts. Rather, it involves repaying a certain amount of debt in order to keep all of your property. Some creditors will be paid in full, others will get a percentage. This is a case by case determination and depends on what needs to be accomplished.
Heard about how bankruptcy will ruin your credit forever? Someone tell you that good people don’t file bankruptcy? Read a newspaper article about how bankruptcy just doesn’t exist anymore? There are a ton of misunderstandings about bankruptcy. You owe it to yourself to get the truth. Call us today!