Financial stress and heavy debt can cause many problems in your life, including rocking your shaky relationship. It is therefore not uncommon to find that people who are in the process of bankruptcy also have marital discord resulting in divorce. Since married couples often have their finances entangled and their financial responsibilities complicated, a sign of financial trouble may cause a rift in many marriages. No matter what the reason behind marital discord and divorce, there are some points to consider when a bankruptcy filing and divorce are taking place simultaneously. (more…)
Tag: chapter 13 bankruptcy lawyers
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How Long Do I Have to Wait To File For Bankruptcy Again?
One of the most powerful legal tools to ward of bad financial situation is bankruptcy. While filing for bankruptcy, you can get rid of huge amounts of debts thereby overcoming financial distress. However, one of the most popular misconception that people have is that if they have filed for bankruptcy once, they cannot file again. Well, lawyers of Sacramento based law firm Recovery Law Group, say that nothing could be further from the truth! (more…)
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How Can Bankruptcy Help Me When I Owe More than the Worth of My House?
Due to bad financial conditions, people might find paying for even essential things like the mortgage, difficult. The situation could be worse for those, who had bought property when the rate was at the peaks as this has resulted in high mortgage payment for a property which is no longer worth as much. This situation is not uncommon, but all is not lost as Sacramento based law firm Recovery Law Group provides options for people who have a home which is worth less than what they are paying in mortgages. (more…)
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All You Needed to Know About Personal Bankruptcy and Business Ownership
For people who are the sole proprietor of their business, filing for personal bankruptcy can have ramifications on the business ownership too. This depends on how the business was legally organized and the type of bankruptcy you have filed in the court. As per U.S. bankruptcy code, individuals can file for bankruptcy under two chapters, depending on their circumstances – Chapter 7 or Chapter 13.
As lawyers of Los Angeles based law firm Recovery Law Group explain, Chapter 7, also known as liquidation bankruptcy is one of the most common types of filing done in personal bankruptcy cases. During this process, a trustee (an individual or an entity) is appointed by the court who oversees the liquidation of all the non-exempt property of the filer so as to settle the debt claims. The non-exempt property is that property which the court permits the filer to keep after the declaration. The amount of assets that any debtor can keep varies from state to state. According to Chapter 7 filing, the debtor’s business ownership can be considered an asset which can be liquidated. However, the methods for assessing the value of the asset can vary widely with debates arising over the proportion of ownership in case of closely held corporations.
Unlike chapter 13, a business going through bad financial times can file for bankruptcy under Chapter 7. However, the business does not get a discharge but its assets are liquidated and the business reorganized so as to distribute the money to the creditors on the basis and priority of their claim. If any remaining amount of due remains, it is wiped off. In case the owners do not want to close the business and liquidate all the assets, they can choose to file for bankruptcy under Chapter 11 to reorganize and pay back the creditors.
Another type of bankruptcy filing for individuals is Chapter 13 which offers to reorganize the finances by taking into account the debtor’s assets, the debt due to him/her, and the expected future source of income or revenue. The court appoints a bankruptcy trustee for this task and the creditors agree to the repayment plan calculated by the trustee after taking into account the various previously mentioned factors. Since only individuals can file for bankruptcy under this chapter, if you are a sole proprietor or own shares in a corporation, only then you can file an individual Chapter 13. You need to list your property interest on Schedule B to get exemption on the equity you have in the business. It is important to remember that in Chapter 13 bankruptcy, debts limits of nearly 1 million in secured debts and about 380,000 in unsecured debts is available.
When you opt for a reorganization filing (Chapter 13), the court mandates a repayment plan and personal living budget, which needs to be adhered strictly. The entire reorganization plan needs to be followed for a long duration, typically 3-5 years. Since some portion of the money will flow from business to the individual during this time frame, the business ownership assets might be affected.
Bankruptcy Outcome May Depend on the Legal Formation of Your Company
A small business is generally organized in one of the three forms –
• Sole proprietorship,
• Limited liability corporation (LLC) and
• CorporationCorporations can be of 2 types: S-Corp or C-Corp, wherein, in the former case, profits or losses flow through to the shareholders, and in the latter case, corporations are taxed separately from their owners. With LLC, the organization structure has a blend of both individual and corporate structure. Just like C-Corporations, LLC to has a separate legal existence from its owners. The U.S. business code provides the owners in LLC to have limited liabilities for corporate debts. However, not all closely-held corporations can be treated similarly as the unique circumstances might differ. It is therefore important to have a consultation with a bankruptcy attorney regarding your current financial situation.
Sole Proprietorship
In case a business is a sole proprietorship, the law doesn’t distinguish between the individual and the corporation, however, the specifics of the portion varies from state to state. Generally, however, due to the close association between the individual and the business, personal bankruptcy may also be considered a business bankruptcy. Under Chapter 7, the court will regard the business as a personal asset which may be liquidated to pay off creditors.
Personal Bankruptcy in Case of LLC or Corporation Ownership
These types of companies are regarded as separate legal entities, unlike sole proprietorship. Thus when individuals with corporate interests file for bankruptcy, only the portion of business ownership which is held by the bankruptcy filer gets affected. The business can run in the usual manner with debtor’s equity in it becoming an asset in the personal filing.
Homestead Exemptions in Personal Bankruptcy
The court, in many states, allows legal provision which exempts the primary residence of the bankruptcy filer from various legal claims including bankruptcy. This is known as the Homestead Exemption. It is one of the major reasons why many entrepreneurs and celebrities choose one of the exempt states as their primary legal domicile. Some states have no limit on the value of exempt residence!
Business Ownership Interests and Chapter 7 Filing
In liquidation bankruptcy cases, the net value of ownership interest (assets minus liabilities) is assessed by the court, to come up with a plan to make money available for paying the creditors. If, for example, an individual who has filed for Chapter 7 bankruptcy has a small business valued by the court or trustee at $500,000 and the filer also possess other assets worth another $500,000 which can be liquidated (cash, property, vehicle, etc.), then the total amount available to pay the creditor’s claim is a million dollars.
This is to be considered theoretically as just evaluating a business interest won’t generate the money, a buyer willing to make the purchase is required to actually have the cash in hand to repay the creditors. Most of the time, many small businesses have no value due to the debts in books from the building and operating of the business.
However, it may be noted, that some jurisdictions offer a bankruptcy code which allows individuals or small businesses to make a fresh start. The “fresh start exception” law may permit a business to continue operating without the burden of debt which was previously attached to the business, prior to a bankruptcy filing.
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Not Sure If You Should File Chapter 7 Or 13? Know The Difference Between Two, First
Confused about what you should file, Chapter 7 or Chapter 13? Based on your current circumstances, you may find one choice outdoes the other. Chapter 7 and Chapter 13 are no same, and carrying different potential consequences. Both, however, can help defaulters make a suitable move toward debt repayment.
Chapter 7 bankruptcy San Antonio, otherwise known as liquidation, is a legal choice that helps people discharge their debts. This also means having to capitulate some of your valuable assets, such as cars, additional properties or even cash, sometimes. (more…)
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Why Should You Always Consider An Attorney While Filing For Bankruptcy?
Chapter 13, a.k.a. ‘wage earner’s plan’ in the United States of Bankruptcy Code allows defaulters to propose a payment plan that would further enable them to give off their debts and also not sell any of their properties. Filing for Chapter 13 is one of the biggest financial decisions that further associate certain obligations and advantages. Chapter 13 bankruptcy lawyers are the only ones to find you a seamless way out of the situation. They first evaluate if you’re an eligible applicant to then help you avoid complications such as delays.
One totally has the right to do so without involving a lawyer, and if the case is uncomplicated and straightforward enough, you can save yourself the lawyer’s fees. This is, however, not a wise decision always. Let’s assume your Chapter 7 involves exorbitant assets, filing Chapter 13 without an attorney with such conditions will definitely cost you more than the fee.
Why Chapter 13 or Chapter 7 lawyers are worth the cost?
The major advantage of proceeding under the guidance of a professional attorney is that he or she will foresee if there are any potential hiccups that are likely to grow while you’re halfway through, thus plan accordingly. Below is a sample of the value, a professional bankruptcy lawyer brings to the table:
Bankruptcy planning
There are types of bankruptcy. You may not know which bankruptcy type you need to file for. Chapter 7 and Chapter 13 achieve a diverse goal, serving a totally different purpose. For example, Chapter 7 helps annihilate debts within a short window, but it does not help save your properties if you’re behind on your monthly payments. An attorney is supposed to consider your needs and constraints carefully and recommend an effective yet seamless bankruptcy filing plan, thus you can achieve your goals.
What does bankruptcy preparation involve?
Application of Means Test: This is to determine if you’re eligible for Chapter 7 bankruptcy or if you can afford Chapter 13 case. Your attorney will recognize any such special circumstance and figure out the best possible utilization of it.
Valuation of your assets: You don’t know how to value that 12 years old television set of yours or your dining room. However, an experienced attorney sure does. He or she will make sure that you divulge and value your properties persuasively.
Selection and application of exemptions: Each state in America nurtures a different exemption organism, utilized to keep an asset while in bankruptcy. An attorney knows exactly how to utilize that exemption rule, thus to protect a large portion of your properties.
Identify discharge of debts: There are certain debts that can never be wiped out in bankruptcy. Some head off only if the conditions are met. An attorney is capable of explaining which debts are likely to be discharged and which are potential to survive the case.
On top of everything, an attorney also helps you avoid bankruptcy fraud. Here’s how?
Little did you know that bankruptcy fraud is a grave crime in the United States of America. This happens to be a punishable crime by the both criminal penalties and civil penalties. If, while filing for Chapter 7/13, you don’t present all your properties, assets, fake records or information, or if you fail to fill out the bankruptcy form truthfully and completely, you are on the verge of committing a bankruptcy fraud.
An attorney will always make sure you aren’t at risk of committing any such fraud, thus avoid criminal/civil penalties. Being a professional bankruptcy attorney, he or she will always review your form and cross-verify each and every information you have given out in the form.
Chapter 7 and Chapter 13 attorneys at Recovery Law Group are easily reachable, despite being busy handling major cases from around the U.S.
Here you can schedule a free consultation with our experts https://bankruptcy.staging.recoverylawgroup.com/ or Call us on 888-297-6203.
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Here’s How We Can Help You With Chapter 7 And Chapter 13 Issues
Bankruptcy has been a serious concern since forever, however many homeowners, families and individuals throughout the U.S. consider it the right choice. To understand bankruptcy protection or liquidation process does require an experienced and comprehensively knowledgeable legal professional, who further will guide you through its system. Recovery Law Group is committed to guiding you as you prepare for bankruptcy and protection. (more…)