JOHN A. BANKER
Attorney at Law
Serving The White Mountain Area For Over 20 Years.
After looking over your assets and debts, we may advise you to file under one chapter or another, but ultimately the choice is yours. Here is a brief run-down...
• Trustee takes over the assets of the debtor's estate, reduces them to cash, and pays creditors, except property that is exempt from liquidation under Arizona law. Because there is often little or no nonexempt property in most chapter 7 cases, there may be no actual liquidation of the debtor's assets.
• Secured, creditors retain their liens. If you want to keep a house, car, etc. on which you owe money, you will have to sign a "reaffirmation agreement" and stay current on the agreed payments. Otherwise you may surrender the collateral and owe nothing.
• Creditors may file proofs of claim with the bankruptcy court and will be paid pro rata out of whatever money the Trustee collects.
• You will receive a discharge that releases you from personal liability for certain dischargeable debts, normally a few months after the petition is filed. Corporations that file Chapter 7. cease to exist after liquidation.
• 2005 amendments to the Bankruptcy Code require a "means test." If your income exceeds certain thresholds, you may not be eligible for chapter 7...
Chapter 13, (Adjustment of Debts)
• Designed for an individual debtor (s) with regular income. If you don't qualify for Chapter 7 under the means test, you can still do a Chapter 13.
• The plan can be used to save a house, car, etc. from repossession or foreclosure if payments are behind. In some cases, you can reduce the debt on a car to the car's current value.
• Assets are not liquidated in Chapter 13. Instead, you to propose a plan to repay creditors over time - usually three to five years. The court will confirm (approve) the plan, after receiving comments from creditors and the trustee, if it meets the Bankruptcy Code's requirements.
• Creditors may file proofs of claim with the bankruptcy court and will be paid pro rata out of whatever money the Trustee collects. Certain "priority" claims such as most taxes and child support must be paid in full, as well as the entire past-due amount on a residence and the lien amounts on any personal property you want to keep.
• The discharge is granted after the plan is completed. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.
Chapter 11 (Reorganization)
-Used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. Sometimes used by individuals who have too much debt to qualify for Chapter 13 (usually over $1 million.)
• The chapter 11 debtor files a plan of reorganization 120 days after it files the case and must provide creditors with a disclosure statement containing information adequate to evaluate the plan.
• Creditors whose claims are not paid in full get to vote on the plan. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. • The debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.
Per 11 USC §342.b.2 we are required to tell you that:
(A) a person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a bankruptcy case shall be subject to fine, imprisonment, or both; and(8) All information supplied by a debtor in connection with a case under this title is subject to examination by the US Attorney General's Office (of which the US Trustee's Office is a part.)