June 20, 2017

Bankruptcy Attorney

Bankruptcy is a legal proceeding or case before a federal bankruptcy court under the federal bankruptcy law whereby a debtor is granted a partial or complete discharge of all  dischargeable debts.  Upon the filing of the bankruptcy petition an initial order of relief is issued by the bankruptcy court.  This is also called an “Order of Automatic Stay”. This order is issued automatically and immediately which, with a few narrow exceptions, stops all creditor collection activities including law suits and foreclosures.

If a debtor has been a debtor in a chapter 13 bankruptcy proceeding that was dismissed within the previous year, a motion to keep this automatic stay from expiring in 30 days from the date of filing the bankruptcy must be filed.  The final order of the bankruptcy court is called the DischargeThis final order comes at the end of the case and permanently discharges all debts and obligations to pay that were owed at the time the case was filed.
 

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WHAT TYPES OF BANKRUPTCY ARE THERE?

For individual debtors there are four types of bankruptcy proceedings:
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Chapter 7

Chapter 11

Chapter 12

Chapter 13

 

WHO CAN FILE BANKRUPTCY?

An individual, a partnership or a corporation regardless of the type of corporation may file a Chapter 7 bankruptcy.  Only individuals may file a Chapter 13 bankruptcy.  Chapter 12 bankruptcy is for farmers and Chapter 11 is for medium to large businesses and individuals engaged is a business with debts that exceed the dollar limits set for Chapter 13 cases.  The information contained herein is for the individual debtor.  Married individuals may file individually or they may file a joint petition with their spouse.  A debtor that has filed a bankruptcy petition that was voluntarily dismissed within the proceeding six months, depending on the circumstances of the dismissal, may not be able to file until six months have passed since dismissal.

 

THINGS BANKRUPTCY COURT WILL NOT TELL YOU:

Debt-settlement firms may do more harm than good
Debt-settlement firms offer to play hardball with creditors and whittle outstanding balances by up to 75 percent.  They bill their services as an alternative to bankruptcy, but in many cases they can hurt more than they help.  Debt-settlement firms are unregulated, for-profit entities that require regular payments before taking any action on a consumer’s behalf.

 

Don’t settle with Mom first or fudge the condo in Boca
Many debtors naturally want to pay back friends and family before filing for bankruptcy.  This is the worst action a debtor can take.  Any money paid to an insider, an insider includes relative, friends and acquaintances, or business partners, within a year (sometimes 2 years) of filing bankruptcy is recoverable by the trustee.  The recipient of the funds must return the funds to the trustee and if they do not do so voluntarily, the trustee has the power to sue them in bankruptcy court and require the funds to be repaid.  No debtor should wish such consequences on a friend or family member.

 

A more serious infraction involves trying to hide assets from the court.  Hiding assets is a bankruptcy crime punishable by imprisonment, fine or both.  The first principle that applies when filing bankruptcy is that “there are no secrets in bankruptcy”.  The judge, the trustee, the Bankruptcy Administrator and the debtor’s attorney will all know as much about a debtor’s finances and business activities as the debtor does.  If a debtor is not prepared to make full and complete disclosure of all money, assets, debts, income, and past and contemplated business activities in the near future, then the debtor should not consider filing bankruptcy.  Timing is everything.

 

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We serve Winston-Salem, NC.