Bankruptcy Law Basics
You have decided to file for bankruptcy.
Many people look upon this negatively, but despite the stigma attached to the concept, it can be a door to freedom.
You will be wiping the slate and getting rid of debt for you or your business, and you will sleep easier knowing that a financial weight has been lifted from your chest.
Everyone deserves a second chance, and unforeseen economic turns and consequences can lead to need to wipe the slate and start over fresh, with a new financial outlook.
However, before you simply file for bankruptcy, you should at least seek the counsel of a trained bankruptcy lawyer.
Recent legislation has made it so that filing for small business owners and even the personal consumer does not absolve all debts across the board. Nor does filing for bankruptcy protect you entirely from previous claims by others.
Before you file, let us take a look at what bankruptcy means, what filing covers, and why you need a bankruptcy lawyer to protect your interests after you file.
After all, the very reasons leading up to your decision to file for bankruptcy may also be the very things that will keep following you and squeezing you for money that you don’t have, despite having filed for bankruptcy.
Presented here are what bankruptcy offers for individuals and businesses.
Table of Contents (jump ahead!)
- Bankruptcy Law Videos
- Bankruptcy For Small Businesses
- Bankruptcy For Consumers And Individuals
- Types Of Debt
- Many common debts
- Taxes, retirement plans, and fines
- Injury and fraud claims
- Garnished Wages
- Why You Need A Bankruptcy Lawyer
- Best Selling Bankruptcy Law Books
Bankruptcy Law Videos
Chapter 7 Bankruptcy Law Explained
Chapter 13 Bankruptcy Laws Explained
Chapter 7 vs. Chapter 13 Bankruptcy Explained
After this, there is an overview of the types of debt you or your business may have incurred, and how they are treated under current bankruptcy law.
Please note that since the financial crisis of 2008, many existing bankruptcy laws were revised to protect against fraud.
An unfortunate side-effect of this is that many bankruptcy cases are not cut and dry, and without legal assistance they often fall in favor of the creditors, and not the individuals and businesses filing for bankruptcy.
This is one of the two most common forms of bankruptcy, considering many small businesses and startups find themselves in dire financial straits within 3 years (or sooner) after inception.
When a business files for bankruptcy, creditors are put on a stay, and after the entire process, debts owed are wiped off the board, and no one can come after a business for monies previously owed.
At least, that’s how it is supposed to work.
Recent legislation and specific types of debt make this a grey area – along with if the business funds were commingled with personal funds.
We will touch back on this in a little bit.
Chapter 7 Bankruptcy For Small Businesses
Bankruptcy For Consumers And Individuals
This form of bankruptcy is perhaps the more popular of the two.
When an individual files for bankruptcy, creditors, lending companies, commercial businesses, and even hospitals can no longer hold debt over your head.
This means that if your house payments or doctors’ bills far exceed your ability to pay them on top of feeding and clothing yourself or your family, bankruptcy might be the way to go.
Consumer Alert – Chrysler’s Bankruptcy Affecting Consumers
Types Of Debt
As with most things that should seem simple, bankruptcy has a lot of twists and turns when it comes to different types of debt for both businesses and individuals.
1.) Many common debts
Many common debts – such as student loans and family support obligations – are not absolved by bankruptcy.
For an individual, these are sometimes the basic reasons diving someone toward bankruptcy in the first place, but in order for those debts to be wiped off the board, undue hardship on the individual must be shown, and for that, you need a bankruptcy lawyer.
2.) Taxes, retirement plans, and fines
Taxes, retirement plans, and fines are also under the scrutiny of the law. In most cases, filing for bankruptcy does not take care of debts owed to personal retirement plans.
As well, current legislation holds that if taxes or fines (speeding tickets and the like) were paid with a credit card, that debt is not erased with bankruptcy unless it can be legally shown that such payment have cause an undue strain and hardship.
3.) Injury and fraud claims
Injury and fraud claims fall under the interests of both individuals and businesses filing for bankruptcy.
Under recent federal law, if you or your business have been defrauded by clients, partners or contractors, but you still owe those parties money – that debt will not be removed.
This gets even harder to remove if those things were paid for by you with a credit card.
Even with all of the paperwork, receipts, and billing statements, along with proof of fraud and injury, the individual or business owner is facing a steep uphill battle in court without a bankruptcy lawyer.
4.) Garnished Wages
Garnished Wages for child support or debt to creditors is given an automatic stay under bankruptcy law, but not in every case.
For the most part, medical bills, credit card and other unsecured debt is given a stay once you file for bankruptcy, but many of these claims and garnishments will resume after the bankruptcy process is completed.
Again, you will be held responsible unless you can present a very strong case as to why garnished wages after bankruptcy will further hinder your financial standing.
Before these situations turn into legal claims, you should at least seek the advice of a bankruptcy lawyer to get an overview of what options are available to you.
There are Two Types of Debts: Good Debt and Bad Debt
As is often the trend leading up to bankruptcy, lawsuits and other legal actions may be taken against you or your business by creditors – or they may be filed by you for any of the above reasons.
Once you have filed for bankruptcy, however, these things are giving a stay.
That is, any legal motions are halted temporarily while the process of bankruptcy is set into motion.
At any time, your creditors may remove lawsuits against you or your business, however there are quite a few categories which are not protected by bankruptcy.
Alimony, child support, property eviction, IRS Audits
Alimony, child support, property eviction, and even IRS Audits will not be given a stay from bankruptcy, under current legislation. Even certain business loans must be repaid regardless of bankruptcy claims under the law.
The only way to avoid this is to make a very strong case for you undue hardship as an individual or business owner, and in most cases, you have no protection from the court system or prosecuting agencies without at least consulting with a bankruptcy lawyer in order hold off paying these debts.
10 Unbelievable Lawsuits
Why You Need A Bankruptcy Lawyer
You may be reading this article and wondering to yourself if filing for bankruptcy is even worth it if the system is against you from the start.
The system isn’t against you.
You may be thinking that these laws and exceptions to bankruptcy debt are completely arbitrary, and only there to keep people from filing in the first place.
The truth of the matter is, these laws and are in place to protect everyone involved, even you.
The reason certain types of debt, loans, and lawsuits aren’t zeroed-out under bankruptcy law is because it safeguards people from fraud across the board.
Just as you can’t go on a shopping spree with your credit cards and rack up half a million dollars in bills and then declare bankruptcy, neither can people take from you what you do not have to give.
For this very reason, combined with recently passed legislation that makes it harder to eliminate personal and business debt by filing for bankruptcy, you should seek out someone who knows what you can and cannot do under the law.
Someone who can see the reasons leading to you filing for bankruptcy, and can protect you from those very things taking money from you after you have completed the bankruptcy process.
Bankruptcy laws have changed drastically over the past six years, and there are even more revisions in the works.
The good news is that there are bankruptcy lawyers – people who pay attention to the federal codes and who can protect you from losing even more money, when that was what drove you to filing for bankruptcy in the first place.
Because of the dire financial straits of individuals and businesses, bankruptcy lawyers often work for extremely affordable prices – sometimes not even taking fees until the court case is settled.
They say a person who defends themselves has a fool for a lawyer and an idiot for a client.
With bankruptcy laws changing and making it harder for an individual or business to get rid of debt, it is beyond your best interest to protect what you do have so you don’t end up with less and owing more even after you file for bankruptcy.
No one ever wants to file for bankruptcy.
It is hard enough to resolve to file without having to sift through laws that – while initially put in place to protect people – only end up costing you more and leaving you with more debt than you were trying to avoid in the first place.
Let someone else do it.
Trust in a professional bankruptcy lawyer to get what you are owed, and to keep creditors from hounding you day and night for things you cannot pay.
You deserve less stress.
You deserve a good night’s sleep.
The TRUTH about Debt Settlement
Most importantly, you deserve that chance to start over and do things right.
A bankruptcy lawyer can protect your interests and ensure that you get that one very important thing – a decent second chance.
Best Selling Bankruptcy Law Books
How to File for Chapter 7 Bankruptcy by Stephen Elias Attorney, Albin Renauer J.D. and Robin Leonard J.D. (Nov 14, 2011) – (458 pages)
Average Amazon.com rating: 4.8 stars out of 108 reviews
Bankruptcy, Cases, Problems and Materials (University Casebook) by Douglas G. Baird, Thomas H. Jackson, Barry Adler – (811 pages)
Average Amazon.com rating: 5 stars out of 3 reviews
Bankruptcy and Debtor/Creditor: Examples and Explanations (Examples & Explanations) by Brian A. Blum – (640 pages)
Average Amazon.com rating: 4.8 stars out of 12 reviews
The New Bankruptcy: Will It Work for You? by Stephen Elias (May 30, 2011) – (416 pages)
Average Amazon.com rating: 4.6 stars out of 13 reviews
Law School Legends Bankruptcy by David Epstein – (Audio CD)
Average Amazon.com rating: 5 stars out of 1 reviews
Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time by Robin Leonard J.D. Stephen Elias Attorney – (496 pages)
Average Amazon.com rating: 4.5 stars out of 35 reviews
J.K. Lasser’s The New Bankruptcy Law and You by Nathalie Martin, Stewart Paley – (226 pages)
Average Amazon.com rating: 4.6 stars out of 3 reviews
Bankruptcy and Debtor/Creditor: Examples & Explanations, 5th Edition by Brian A. Blum – (656 pages)
Average Amazon.com rating: 4 stars out of 5 reviews
The Elements of Bankruptcy, 5th (Concepts and Insights) by Douglas G. Baird – (270 pages)
Bankruptcy for Small Business Owners: How to File for Chapter 7 by Attorney Stephen Elias / Bethany K. Laurence – (593 pages)
Average Amazon.com rating: 4.5 stars out of 6 reviews
Debt’s Dominion: A History of Bankruptcy Law in America by David A. Skeel – (296 pages)
Average Amazon.com rating: 4 stars out of 1 reviews
The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems by Joan N. Feeney / Ted Connolly – (385 pages)
Average Amazon.com rating: 5 stars out of 8 reviews
Strategies for Creditors in Bankruptcy Proceedings by Lynn M. LoPucki / Mr. Christopher Mirick – (955 pages)
Average Amazon.com rating: 5 stars out of 1 review
Practical Bankruptcy Law for the Paralegal by Pamela Webster, Ric Boyer, David Lauren
Average Amazon.com rating: 5 stars out of 1 review
The Glannon Guide to Bankruptcy: Guide to Bankruptcy by Professor Nathalie Martin – (400 pages)
Average Amazon.com rating: 4 stars out of 10 reviews
Bankruptcy Code, Rules and Official Forms, 2010 Law School Edition by West Law School – (1158 pages)
Average Amazon.com rating: 5 stars out of 1 reviews
Bankruptcy Investing – How to Profit From Distressed Companies by Ben Branch, Hugh Ray – (328 pages)
Average Amazon.com rating: 4.7 stars out of 9 reviews
Introduction to Bankruptcy Law (West Legal Studies series) - (672 pages)
Average Amazon.com rating: 4 stars out of 3 reviews
The Law of Bankruptcy by Charles Jordan Tabb – (1447 pages)
Average Amazon.com rating: 4 stars out of 1 review
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United States Bankruptcy Court Seal