San Diego Bankruptcy Attorney (2)

1
Types of Personal Bankruptcies
diego bankruptcy attorney Filing as a private
individual? Personal bankruptcy generally comes
in two flavors, known by their places in the
federal Bankruptcy Code Chapter 7 and Chapter
13. Chapter 7 Liquidation san diego bankruptcy
Chapter 7 is the most commonly chosen option,
with 381,217 cases filed in 2020. That
represents 70 of bankruptcies that year. Chapter
7 is straightforward and essentially misnamed.
While the law provides for the sale of certain
assets for distribution among creditors, in fact
close to 96 of Chapter 7 bankruptcies are
considered "no-asset" cases The filer has no
property with sufficient equity to be seized and
sold by the court-appointed trustee to pay off
creditors. Chances are, you will keep your
property, and depending on how long chapter 7
bankruptcy takes (typically four to six months),
you will emerge with all but certain unsecured
debts discharged - that is, wiped clean. Alimony,
child support, some taxes, liens on property,
and student debt (in most cases) will remain. If
Chapter 7 does not work out, you can file a
second bankruptcy after the time limit
expires. Chapter 13 Reorganization San Diego
Bankruptcy Attorney Chapter 13 is for debtors
with reliable incomes who want to keep their
home or car but have fallen behind on their loan
payments. Chapter 13 stops foreclosure and/or
repossession actions while filers enter into a
court-mandated repayment plan, which will
include catching up on back payments and paying
off at least a portion of their unsecured
debt. There were 154,341 Chapter 13 cases in
2020, accounting for 28 of the total bankruptcy
load. Upon successful completion of the
repayment plan - typically three to five years -
any remaining unsecured debt (medical bills,
credit cards, personal loans) may be discharged.
Certain types of debts that are not discharged
in Chapter 7 may be discharged in Chapter 13.
2
Personal Bankruptcy Comparison
Worth noting Chapter 11 bankruptcy, once only
for businesses (see below), is available to
individuals with debts above the Chapter 13
limits. Most often, Chapter 11 is the refuge of
celebrities, pro athletes, and real estate
investors. Types of Business Bankruptcies Busines
s bankruptcies typically fall into one of three
categories. Two - Chapter 7 and Chapter 13 - are
variations on the personal bankruptcy theme.
Chapter 11 bankruptcy is generally for
businesses that have hit a bad patch and might be
able to survive if their operations, along with
their debt, can be reorganized. Business
bankruptcies involve legal entities ranging from
sole proprietorships and LLCs (limited liability
corporations) to partnerships, professional
associations, and corporations. Chapter 13
Small Business Repayment Plan Customarily
reserved for individuals, Chapter 13 can be used
for small business bankruptcy by sole
proprietorships because the sole proprietor and
the individual are indistinguishable in the
eyes of the law, they exist as one. The small
business that wants to reorganize rather than
liquidate files Chapter 13, including a
repayment plan that details how debts will be
repaid. The amount that must be repaid hinges on
how much you earn, how much is owed, and the
value of the property owned. Why not file
Chapter 7 liquidation bankruptcy and be done with
it? Chapter 13 protects personal assets, such as
a home, which would be exposed to seizure if a
sole proprietor filed Chapter 7.
Chapter 7 Liquidation A business that lacks a
viable future and is overwhelmed by obligations
is a good candidate for a Chapter 7 business
bankruptcy. The owners surrender their business
to a court-appointed trustee for an orderly
liquidation. Nothing is exempt everything goes.
At the completion of the process, all
obligations - leases, contracts, loans, overdue
accounts, credit cards, and other business
debts - are generally written off by creditors as
all business assets were presumably liquidated.
While there is no discharge in business Chapter
7, the practical effect here is that the
businesss assets are liquidated and creditors
paid to the extent possible. Unless they have
made themselves personally liable for the
business debts, the former owners are free and
clear.
Chapter 11 Business Reorganization
3
For a business, bankruptcy does not necessarily
mean ruin. If it did, there would be three fewer
major air carriers (United, Delta, American), two
fewer car manufacturers (General Motors,
Chrysler), and no Marvel Universe. Chapter 11
filings - which surged during the coronavirus
shutdown in 2020 - allow troubled businesses to
protect themselves from creditors while they
reorganize their business operations, debts, and
assets. If all goes well, the business
re-emerges a few years later - oftentimes
smaller, sleeker, more efficient, profitable -
and creditors have enjoyed a more satisfactory
return than they would have if the business
ended operations and was liquidated. Sometimes,
however, Chapter 11 buys only time. The
reorganization plan fails, and liquidation
results. The 2011 demise of Borders Books, once
the nations No. 2 bookseller, is a prominent
example.