Bankruptcy / Debt Relief
There are many reasons why people's financial fortunes change and put them into challenging circumstances. Changes in the economy leave people unemployed or under employed. Injuries and illnesses prevent people from earning their livelihood, and disability insurance is seldom sufficient to support an individual, much less a family.
When challenging financial circumstances arise creditors often behave like "sharks in the water" and can create immense pressure and emotional distress. Having a trusted advocate to negotiate on your behalf can be crucial to putting debt issues behind you to enable you to get on with your life.
Options for Debt Relief / Bankruptcy
While bankruptcy is often a necessary option, it must be carefully considered as it has a long-term impact on everyone involve. Even within bankruptcy, there are different options to consider (known as "Chapters" in the bankruptcy law books). The following are options to consider, all of which we can explore with you.
Negotiation with Creditors - while creditors often use threats and harassment to try to recoup a debt, there are laws to protect you. In the end they are trying to recover money from you, and bankruptcy often means they get nothing. Negotiating with them if you don't know the law, however can make things worse not better, particularly if you end up giving one creditor a better repayment plan than another.
Bankruptcy Chapter 7 - under Chapter 7 individuals and companies often have their entire debt burden relieved. The important thing to understand with Chapter 7, however, is that you will be expected to liquidate many of your "non-exempt" assets to pay your creditors. In most situations you'll be able to keep your home, car and personal belongings. Non-essential items, for example a boat, are typically not exempt and would be sold to help the creditors recover a portion of their losses.
Bankruptcy Chapter 13 - under Chapter 13 most people are enabled to keep all of their assets. They must, however repay a percentage, or in some cases all of the debt they owe, under a repayment plan which must be approved by the court. In most cases this repayment plan will take 3-5 years. People who have assets to protect, for example a home or vehicles are better served with a Chapter 13 bankruptcy petition.
Bankruptcy Chapter 11 - for businesses, Chapter 11 is the rough equivalent of Chapter 13, where a business is allowed to reorganize its finances, relieve certain debts and emerge as a healthier ongoing concern. This may, however not be an easy option, depending upon the complexity of the business, the number of assets, ownership structure, etc. Only an experienced attorney can tell you if this option is viable.
More information can be found on the U.S. Courts web site...
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