Bankruptcy Issues
October 17, 2011 By Law Offices of Salar Atrizadeh
Bankruptcy filings continue with their decrease for the first half of year 2011.
However, this does not mean that our economy is getting better. In fact, the decrease in consumer bankruptcy filings, may show that unemployed individuals are too broke to file.
Based on recent statistics, it shows that bankruptcy filings fell by 8 percent in the first six months of 2011 compared to the first six months of 2010. Some experts contend that if we see an increase in bankruptcy filings, it may be a sign that our economy is improving. Approximately 15 million in America are currently unemployed and probably need to max-out their debts in order to survive the recession. See the United States Department of Labor Bureau of Labor Statistics. As such, they may be holding off on filing for bankruptcy until they secure employment. Another expert believes that people tend to file when they return to work to have a fresh start which is one of the benefits of filing for bankruptcy.
There are several different options for filing a bankruptcy petition which is an application by a debtor (or his/her creditors) to a court to declare the debtor bankrupt. This depends on the debtor's financial status and ultimate goal. For example, Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as "straight bankruptcy" or "liquidation" cases, and may be filed by an individual, corporation or a partnership. Under Chapter 7, a Trustee is appointed to collect and sell all nonexempt property and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt. Chapter 7 individuals may receive a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be necessary as well as the corporation or partnership bankruptcy. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
In addition, Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,441,875. Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. See 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. This chapter is not available to corporations or partnerships.
Chapter 13 generally permits individuals to keep their property by repaying creditors out of future income. Chapter 13 debtor proposes a Repayment Plan which must be approved by the Court. The amounts set forth in the Plan must be paid to the Chapter 13 Trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a Chapter 13 Plan. After completion of payments under the Plan, Chapter 13 Debtors receive a discharge of most debts.
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Click here for more information about bankruptcy.
Be as it may, no one can deny the fact that the global economy, including, but not limited to, America's current financial status is in dire straits. Therefore, it is important to learn the ways to avoid a personal financial crisis before it happens.
ABOUT THE AUTHOR: Salar Atrizadeh, Esq.
Salar Atrizadeh, Esq. is licensed to practice law in the State of California, District of Columbia and the United States District Courts for the Central District of California. Mr. Atrizadeh has dedicated his practice in learning about day-to-day legal problems and providing solutions to his clients. He is familiar with various areas of the law, including but not limited to, civil litigation and transactional work. Mr. Atrizadeh is a knowledgeable attorney with sophisticated strategies and records of success to protect client interests. He has extensive experience in law office management and after graduation began his private practice in Los Angeles, California.
Mr. Atrizadeh is a member of the Cyberspace Law Committee of the American Bar Association's Section of Business Law. He is also a member of the California State Bar's Cyberspace Law Committee and a member of the Internet Society.
Copyright Law Offices of Salar Atrizadeh
More information about Law Offices of Salar Atrizadeh
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Based on recent statistics, it shows that bankruptcy filings fell by 8 percent in the first six months of 2011 compared to the first six months of 2010. Some experts contend that if we see an increase in bankruptcy filings, it may be a sign that our economy is improving. Approximately 15 million in America are currently unemployed and probably need to max-out their debts in order to survive the recession. See the United States Department of Labor Bureau of Labor Statistics. As such, they may be holding off on filing for bankruptcy until they secure employment. Another expert believes that people tend to file when they return to work to have a fresh start which is one of the benefits of filing for bankruptcy.
There are several different options for filing a bankruptcy petition which is an application by a debtor (or his/her creditors) to a court to declare the debtor bankrupt. This depends on the debtor's financial status and ultimate goal. For example, Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as "straight bankruptcy" or "liquidation" cases, and may be filed by an individual, corporation or a partnership. Under Chapter 7, a Trustee is appointed to collect and sell all nonexempt property and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt. Chapter 7 individuals may receive a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be necessary as well as the corporation or partnership bankruptcy. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
In addition, Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,441,875. Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. See 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. This chapter is not available to corporations or partnerships.
Chapter 13 generally permits individuals to keep their property by repaying creditors out of future income. Chapter 13 debtor proposes a Repayment Plan which must be approved by the Court. The amounts set forth in the Plan must be paid to the Chapter 13 Trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a Chapter 13 Plan. After completion of payments under the Plan, Chapter 13 Debtors receive a discharge of most debts.
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Click here for more information about bankruptcy.
Be as it may, no one can deny the fact that the global economy, including, but not limited to, America's current financial status is in dire straits. Therefore, it is important to learn the ways to avoid a personal financial crisis before it happens.
ABOUT THE AUTHOR: Salar Atrizadeh, Esq.
Salar Atrizadeh, Esq. is licensed to practice law in the State of California, District of Columbia and the United States District Courts for the Central District of California. Mr. Atrizadeh has dedicated his practice in learning about day-to-day legal problems and providing solutions to his clients. He is familiar with various areas of the law, including but not limited to, civil litigation and transactional work. Mr. Atrizadeh is a knowledgeable attorney with sophisticated strategies and records of success to protect client interests. He has extensive experience in law office management and after graduation began his private practice in Los Angeles, California.
Mr. Atrizadeh is a member of the Cyberspace Law Committee of the American Bar Association's Section of Business Law. He is also a member of the California State Bar's Cyberspace Law Committee and a member of the Internet Society.
Copyright Law Offices of Salar Atrizadeh
More information about Law Offices of Salar Atrizadeh
View all articles published by Law Offices of Salar Atrizadeh
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
