Chapter 11 Explained

When a person or a business needs to file for bankruptcy protection, there are several chapters within the United States Bankruptcy Code under which the initial petition can be filed that will govern the subsequent proceedings.  While many people understand the basics for bankruptcy petitions that are more consumer-oriented and usually filed under Chapter 7 or Chapter 13, many see filings under Chapter 11 of the code as extremely complicated and difficult to understand.

While a bankruptcy filing under Chapter 11 is usually a complicated matter, there are some basics that are not difficult to understand.  However, this is not a filing that one should attempt to take on individually.  You will need professional help in order to make sure that all goes as it should, so contact a bankruptcy lawyer today to schedule an initial consultation if you are having trouble meeting your obligations.

Basic Procedure under Chapter 11

Generally, a Chapter 11 filing is done by businesses, and this sort of filing is known as either a 'reorganization bankruptcy' or a 'rehabilitation bankruptcy.'  The reason for these labels is that a Chapter 11 filing basically gives the petitioner time to put together a plan that helps it get out from under the debts it cannot pay at the time of the filing and to one day 'emerge' from bankruptcy.

Below is a brief look at the procedures involved with a Chapter 11 filing:

Initial filing - When a business files for Chapter 11 protection, the court will order that the creditors cease with collection efforts while the case is pending, much like in a consumer bankruptcy filing.
Disclosure statement - The filing party must also file a disclosure statement that lists all assets and liabilities as well as a plan for reorganization that details how the debts will be paid during the plan's duration.
Creditors' committee - When a filing occurs, the largest creditors are usually grouped into a committee that will vote on the reorganization plan.  If the plan is approved, the parties move forward under it.  If it's not, either the filing party must come up with a new plan, the creditors can come up with their own plan or the filing party can petition the court to 'cram down' their plan if it's reasonable on its face, and the court will rule on it.
Post-plan - When the court ultimately accepts a plan, the debts as constituted prior to the filing are discharged and the petitioner must make the payments proposed in the plan until the time has passed.  If the company does not pay under the plan, it opens up several possibilities for enforcement.

How You Should Proceed

If your Arizona business is struggling, it doesn't necessarily mean that it's time to shut the doors for good. You could emerge from Arizona bankruptcy just like many other companies have done, but you'll need the help of an experienced bankruptcy attorney. Contact Phillips & Associates today to schedule an initial consultation.

Chapter 7 Bankruptcy Things to Consider

If you think there are more people filing for Chapter 7 bankruptcy this year than in the past you are correct. This is the type of financial repayment plan where all assets possible are used to repay debts, from checking and savings accounts to proceeds from the sale of inventory or personal possessions. Depending on the state, as a Chapter 7 filer you are allowed to keep a vehicle, your primary residence and a reasonably long list of personal items. The rules are slightly different from state to state, so be sure to check with your court or a local bankruptcy attorney to see how it works in your state.

Most bankruptcy attorneys encourage people to take a good hard look at their finances before considering bankruptcy. Although many of your immediate financial problems will be wiped clean, your credit score will be damaged and this may make it harder to get credit for a period of time. So at what point should you go ahead and file for bankruptcy?

If you are overwhelmed with debt and have failed in negotiating with your creditors, you might be a candidate for bankruptcy. When you do a tally of your assets and liabilities and you find that your liabilities are significantly more than your assets, it is probably time to take action. If your ability to save for your retirement or plan for the future has been put in jeopardy by the mountain of debt facing you, bankruptcy may be the answer.

Going through a bankruptcy proceeding doesn't carry the same stigma it used to and has become almost common these days. If you have more debt than you can handle, it's not necessarily your fault. Letting it ruin your life, however, would be a poor decision. Chapter 7 could be a tool to restart your life without debt. Just remember not to do the same things you did before that got you into this mess in the first place.

Finding a bankruptcy attorney to help you regain control of your finances could be the best decision you've ever made. Debt can become unmanageable for several reasons, most of which are beyond your control. The state of the economy has caught millions of people in the same predicament and there is nothing in it for anyone to insist that having impossible debt hanging over a person's head for the rest of their life is any kind of solution to the problem.

Many bankruptcy lawyers offer free consultation before it is necessary to choose who you want to use. This is a good way to ascertain whether you and the attorney are on the same page. It is also a good time to become clear on the costs involved in retaining a specific legal firm as well as what he or she expects of you as a client.

Interview several attorneys. Consider their background, their reputation, how comfortable you feel with them, and of course consider the price they charge. You may even want to check with the state bar association to find out if an attorney you're considering is in good standing and has no complaints filed against them. Choosing an attorney to advise you and represent you is an important decision that should not be taken without proper consideration.

It is not easy to make the decision to proceed with bankruptcy. But the fact is, bankruptcy can put an end to an uncomfortable chapter of your life and give you a fresh start. Hopefully you will come out of it with a better understanding of the dangers of credit, and a commitment to avoid letting it happen again.

Nick Messe is president of Lead Frog, LLC. In the Milwaukee and Waukesha area the Burr Law Office specializes in bankruptcy and debt relief services. Milwaukee Chapter 7 bankruptcy is an effective way to eliminate many types of debt and have a fresh financial start - http://www.burrlawoffice.com