Chapter 13 and Chapter 11 bankruptcy have certain key similarities that can cause confusion for anyone who doesn’t specialize in bankruptcy.

Who Can File for Chapter 11 and Chapter 13 Bankruptcy?

Chapter 11 bankruptcy is available for businesses and individuals with a very large amount of debts and income.  Filings are available for almost all individuals as well as sole proprietorships; however there are debt/income limits for eligibility. These limits change each year.

Chapter 11 Bankruptcy- Creditors Vote

In both Chapter 11 and Chapter 13 bankruptcy, the debtor and the debtor’s lawyer or law firm create a plan to reorganize and consolidate the debt. In Chapter 13 bankruptcy, the creditors accept the plan assuming it meets
certain legal standards. In Chapter 11 Bankruptcy, the creditors vote to determine whether they will pass or reject the plan.

Under Chapter 11, if the creditors turn down the plan, the debtor can come up with a new plan. The judge may force the creditors to accept the debtor’s plan or the negotiations may simply fail. If negotiations fail, the business will either have to file for business Chapter 7 bankruptcy, or, the case may be dismissed.

To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team. Just call 512-322-5367 or
contact our offices online.

The economic downturn has forced many businesses large and small to file for Chapter 11 bankruptcy. Chapter 11, known also as Reorganization, is a complex process that requires experienced guidance and counsel.

Details of Chapter 11 Bankruptcy

In Chapter 11 bankruptcy, the filing business makes an attempt to come up with a new payment plan to reorganize its debt. This plan is presented to creditors in bankruptcy court. The creditors then cast ballots to vote on whether or not to accept it. If there is agreement, the plan becomes a new contractual agreement between the parties.

If they disagree, your bankruptcy lawyer can try to come up with a new plan, or the bankruptcy court can impose the plan on the creditors or the negotiations may simply end up failing. A bankruptcy attorney with the necessary experience can help you reach a Chapter 11 bankruptcy reorganization plan that creditors or judges will accept.

Bankruptcy Reorganization- What’s Involved?

The Chapter 11 reorganization most likely will involve an attempt to reduce the value of the business’s debts to match the value of its assets. Debts in excess of the value of the business assets are treated as unsecured, and a large amount of them are forgiven.  Secured debts can also be renegotiated or litigated to achieve a lower interest rate and for a longer repayment duration.

To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team. Just call 512-322-5367 or or
contact our offices online.

Chapter 13 bankruptcy may allow you to overcome a insurmountable debt load without having to give your belongings to creditors. It takes between three and five years to complete, and it is available for both indebted individuals and sole proprietorships.

Debt Relief for Individuals and Sole Proprietorship Businesses

In Chapter 13 bankruptcy all your debts are reorganized into one monthly payment. This occurs through negotiations during a Chapter 13 bankruptcy court hearing where you, your lawyer, your creditors and a Chapter 13 trustee can negotiate a fair reorganization plan.

For three to five years, you will make your monthly payments to the Chapter 13 trustee, who will distribute payments to your creditors. At the end of the three to five year period, all your debts will be wiped clean.

Secured Debts in Bankruptcy

Secured debts, like back liens taxes, mortgages or car payments, can sometimes be altered under this plan. However, the dollar amount owed on most home mortgages and consumer auto loans will not be lowered. But, by paying only a percentage owed on unsecured debt could allow yourself to free up income and allow your to catch up on payments to avoid foreclosure or repossession.

Restrictions do apply to those who choose to file a Chapter 13 bankruptcy. You may not be eligible if the money you owe exceeds a certain amount. If you are not able to file under Chapter 13 or consumer Chapter 7 bankruptcy, you may need to consider business Chapter 7 bankruptcy or Chapter 11 bankruptcy. A lawyer can help you determine which approach is best for you.

To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team.

The stress of increasing debt can rapidly become overwhelming. If creditors keep hounding and your debt is growing faster than you can pay it back, you may want to consider bankruptcy.

What is Chapter 7 Bankruptcy?

In Chapter 7 bankruptcy, all of your legally dischargeable debts are forgiven. In exchange you must surrender your “non-exempt” assets and forfeit the proceeds to be divided among creditors. However, many assets qualify as “exempt.” Exempt assets are protected assets that individuals get to keep. In most cases, individuals who file for Chapter 7 bankruptcy do not end up surrendering assets.

Know Which Assets Are Exempt

Exempt assets are assets individuals get to keep and are not affected by the filing of a bankruptcy. The rules of exemption are complex. Your exemptions will depend on whether or not you possess a home, the amount of time for which you have owned the home and the amount of time you have lived in the State of Texas. In most instances, individuals are able to keep their home, often depending on whether or not they are able to catch up with their mortgage payments to avoid foreclosure.

Why Consumers File for Chapter 7 Bankruptcy?

While bankruptcy laws have changed over the years, the needs of citizens filing for bankruptcy have not. Contrary to the assertions of lenders, very few bankruptcies result from financial irresponsibility. Almost all bankruptcies are triggered by forces beyond the person’s control, like unexpected medical bills or hard economic times.

Chapter 7 bankruptcy is a good option for consumers who don’t have a large amount of non-exempt assets. If you have many assets, you may want to consider filing for Chapter 13 bankruptcy instead. Talk to a bankruptcy lawyer to find out which option is best for you.

To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team. Just call 512-322-5367 or or contact our offices online.

Bankruptcy is a legal action for debtors to deal with insolvency. Most debtors are given relief even if there is not a complete discharge of debts.

Title 11 of the United States Code establishes and sets the guidelines for bankruptcy procedure. There are various types of bankruptcy outlined in Title 11, and debtors are eligible for certain forms of bankruptcy based on their financial situation, their type of business (in the case of a business bankruptcy) and other factors. The court appoints a trustee who oversees the bankruptcy proceedings.

A bankruptcy may be voluntary or involuntary. A voluntary bankruptcy is one that the debtor initiates, as opposed to an involuntary bankruptcy, which is a legal action taken by creditors against the debtor. In an involuntary bankruptcy the debtor has the opportunity to contest the bankruptcy petition.

The Bankruptcy Code prevents creditors from pursuing collection actions against the debtor while he or she is either working out a payment plan or while the trustee dealing with liquidation of assets. The Bankruptcy Code determines all aspects of the bankruptcy, including the chapter of bankruptcy that applies, which bills are eliminated and the time period for payment.

2. How does filing bankruptcy stop other creditor actions against you?

As soon as you file a bankruptcy petition, the court issues an ‘‘automatic stay,’’ which is a legal action that prevents creditors from pursuing collection activities or legal actions against you in an effort to collect debt. If the creditor has seized funds after the petition was filed, in many cases those funds must be returned. Your bankruptcy attorney will explain legal actions that will be taken to recover these funds.

Repeat bankruptcy filers are subjected to different rules under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2006 (BAPCA). It is very important to consult a bankruptcy attorney regarding how the automatic stay may be handled under the new rules if you previously had a dismissed bankruptcy.

3. How frequently can you file for bankruptcy?

If you filed a Chapter 7 bankruptcy and received a discharge, you must wait 8 years before filing another Chapter 7.

You cannot receive a discharge in a Chapter 13 case if you received:

a) A discharge in a prior case under Chapter 7 11, or 12 that was filed within four years of the current
Chapter 13.

b) A Chapter 13 discharge in a case that was filed within two years of filing the current Chapter 13.

However, a ‘‘Chapter 20’’ filing may be available to you under the above rules. A Chapter 20 filing is a Chapter 7 case to eliminate unsecured debt followed immediately by a Chapter 13 case to allow mortgage arrearages to be remedied, etc. The reason it may be available to you under the above rules is because the point of the follow-up with a Chapter 13 case is usually to repay a mortgage debt and not to get a discharge from that debt.

4. Do you have to list all your creditors in your bankruptcy petition?

Yes, you are obligated to list in your bankruptcy petition all your creditors. A creditor is any company or any person, even a family member or friend that you owe money.

5. Will your employer discover that you filed bankruptcy?

You usually don’t have to worry about your employer finding out about your bankruptcy unless your employer is one of your creditors or your wages are no longer being garnished, in which case your employer may follow up to learn why the garnishment ceased.

6. Will you lose your job after filing for bankruptcy?

No. You are protected against discrimination based on bankruptcy laws that prohibit job termination due to filing bankruptcy.

7. How will bankruptcy affect your credit rating?

Chapter 7 bankruptcy filing remains on your credit report for 10 years, and Chapter 13 remains for 7 years. You may start qualifying for loans such as a car loan as early as one year after filing bankruptcy if you meet the income requirements. However, the lender will likely charge you higher than normal interest rates. It may take five to seven years before you are offered normal interest rates again.

8. Can you repay a creditor after you file for bankruptcy?

Under Section 524(f) of Title 11, you are authorized to repay any creditor you choose.

9. Will bankruptcy discharge taxes owed?

There are circumstances which discharge tax debt. For Chapter 7, if you filed your tax return for the year, under the circumstances below your debt will be discharged:

1. The 3-Year Rule: Your tax return was due more than 3 years prior to your bankruptcy filing. If you obtained an extension, the due date would be the extension deadline.

2. The 2-Year Rule: If your late return (filed after its due date and any extensions) was actually filed more than 2 years prior to the bankruptcy filing. 3. The 240 Day Rule: If the IRS assessed your taxes more than 240 days prior to the bankruptcy filing

4. If you did not file a fraudulent return or knowingly attempt to evade paying taxes.

There are other taxes your attorney can review with you, such as trust fund taxes, tax liens and taxes not covered by the 2 and 3 Year Rules. Because these tax areas can be very complicated, an experienced bankruptcy attorney can be invaluable in helping you sort out what taxes are discharged and what taxes you still owe.

10. After you file bankruptcy do you have to go to court?

With a Chapter 7 bankruptcy you usually have to attend one Meeting of Creditors before your bankruptcy trustee,  which takes place 20-40 days after filing your bankruptcy petition. For a Chapter 13 bankruptcy you will have go to court for two appearances before your trustee, for the Meeting of Creditors and the Confirmation Hearing.

If you are seeking extra relief, other court appearances may be required. Your Discharge is entered after all required Plan payments have been made and your certificate evidencing completion of the Instructional Course in Personal Financial Management has been filed.

11. How can you re-establish your credit after bankruptcy?

You can re-establish your credit by getting a co-signer on a loan and also by getting a secured credit card. With a secured credit card you, your credit card will have a limit based on the sum of money you gave the creditor as security for your card.

12. Can you keep a credit card after bankruptcy?

Yes. If the credit card was not adversely affected by your insolvency, most credit card companies will continue to do business with you after filing for bankruptcy.

13. What are the signs that you may be in trouble?

* You’re making balance transfers from one card to another lower interest rate card.

* You are only able to make minimum credit card payments.

* You have maxed out your credit cards.

* You are covering basic living expenses, such as food, with your credit card.

* You’re taking ‘‘cash advances’’ from one card to pay on another.

* You need a co-signer before you can qualify for a car loan.

* You cannot afford health insurance because all of your money is being used to cover revolving debt.

* You are refinancing your house over and over to pay down debt.

* Creditors call you at all hours of the day or night at home or at work.

* Your creditors are calling your neighbors.

* Creditors are filing lawsuits against you.

* Your house is in, or on the verge of, foreclosure.

* The IRS filed a tax lien against you.

14. After filing bankruptcy, what entries will appear on your credit report?

While creditors are supposed to notify credit-reporting agencies when debts are discharged, they do not always do so. As a result, you may have discharged debts still appearing on your credit report. You should send copies of the following documents to the three credit reporting agencies to ensure your credit report accurately reflects your discharges:

* Discharge of Debtor and Order of Final Decree

* Notice of Bankruptcy Case Filing (attached to the front of your petition)

* Schedules ‘‘D’’, ‘‘E’’ and ‘‘F’’ of your bankruptcy petition, together with any amendments of said schedules:
Experian
PO Box 2104
Allen, TX 75013
Equifax Information Services
PO Box 105873
Atlanta, GA 30348
TransUnion
PO Box 1000
Chester, PA 19022

Unless you specifically hire your attorney to do so, it is not his job to clear up any errors on your credit report, once your debts are discharged. You can easily take the above steps yourself and save the expense of additional  attorneys’ fees.

15. Has bankruptcy become more difficult and more expensive since the enactment of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)?

Yes. Since the enactment of BAPCPA, the rules for filing bankruptcy are more stringent. You must take a Means Test, go to credit counseling classes before you file for bankruptcy, and obtain additional budgeting and debt management counseling before your debts are discharged. And, there is more documentation than ever before. The time it takes to carry out the added tasks has increased the cost of an attorney, and court filing fees are also higher than before BAPCPA was passed. More documentation and stricter rules have definitely made filing bankruptcy more difficult.

To speak to an attorney about your matter, please call us now at 512-322-5367.