Bankruptcy Archives - Page 7 of 14 - Reinherz Law Offices

215 922 2055

856 302 3989

Philadelphia
New Jersey

215 922 2055

856 302 3989

Philadelphia
New Jersey

Helping Good People Through Hard Times for Over 30 Years.

Archive for the ‘Bankruptcy’ Category

Personal Bankruptcy for Small Business Owners

If you are a small business owner facing a mountain of personal debt, you are likely concerned about how filing for bankruptcy would affect your business. The answer is not straightforward, as much depends upon the way that your business is organized and what type of business you are operating. In some cases, you may be required to close the business operations entirely. To get an idea of how a personal bankruptcy might affect your small business, we have assembled a quick reference guide.

Sole proprietor – If your business operates as a sole proprietorship, there’s a good chance that filing for bankruptcy will lead to your bankruptcy trustee asking you to close it temporarily. The goal of closure is to provide time for the business’ assets to be assessed for possible sale of assets. Closure will also prevent the business from incurring any more debts and protect against further liabilities for personal injuries and the like. If you operate as a freelancer or another type of business that does not have assets, you may be able to continue operating. Keep in mind that your accounts receivables will become part of the bankruptcy estate and may be used to pay your creditors.
Partnerships and LLCs with Multiple Members – If you own a share in a business, then your share will become part of your bankruptcy estate. This does not give the trustee the right to take any of the partnership or LLC’s assets, though they can issue a “charging order” against your business interest so that if you would be owed a distribution of profits or income, the trustee would be able to receive it for distribution to creditors. Some partnership agreements require that you end ownership interest before filing for bankruptcy in order to avoid any complication involving ownership interest, so it is a good idea to check the terms of your agreement before taking any action.
Corporations and Single-Member LLCs – If you own corporate shares or are the sole or majority owner of a corporation or LLC, your shares or membership interest can be taken by your bankruptcy trustee and sold or liquidated to generate assets for the satisfaction of creditors. Whether this is done will depend upon a cost/benefit evaluation of whether assets are exempt and how much they can be sold for.

As you can see, there is no simple answer to how a bankruptcy filing impacts a person who is the owner or who has ownership shares in a small business. For guidance in your specific situation, contact us today to set up a time to discuss your situation.

Will I Be Able to Buy a House After a Bankruptcy?

If you are facing financial difficulties significant enough to have you considering bankruptcy, you are probably dealing with numerous fears and uncertainties about the process. One of the most common concerns is whether doing so will keep you from buying a house in the future. The good news is that it is possible to buy a house after bankruptcy, but doing so will not necessarily be easy.

Buying a house after filing for bankruptcy requires a good understanding of your financial standing, and that should start as soon as the bankruptcy is approved. Your goal is to rebuild your credit rating as soon as possible. This will take time and discipline.

The first thing that you need to know is that you can’t consider purchasing a house until your filing has been discharged and the bankruptcy court has released you from liability for all of your previous debts. Though this doesn’t mean that your case is officially over, the discharge is the most important thing for potential lenders to see. It proves that you have no outstanding debt (or won’t have any shortly).

Even after your bankruptcy is discharged, you need to know that it can stay on your credit report for as long as ten years, and this is something that a potential creditor will consider before agreeing to loan you money. It may not mean that you’ll be turned down, but you may end up with terms that aren’t as attractive as they would have been if your credit rating was good.

One of the best ways of rebuilding your credit is to spend money. That may sound a bit counterintuitive, but you need to start charging again, using secured credit cards and installment loans that you pay off in full every month, before the due date. You also want to make sure that your credit report is correct, and that means checking in regularly to make sure that any wrong items are removed. Doing so is free, though you are limited to just one free report per year from each of the credit rating agencies. The good news is that they all have the same basic information, so you can check in with one of them every few months and rotate your inquiry.

The bottom line about buying a house after bankruptcy is that you want to prove to creditors that you are worthy of their trust. The best way to do that is to avoid the mistakes of the past. For more information on how to put yourself in the best possible position with regards to a bankruptcy filing, contact our office today.

Is Bankruptcy My Only Debt Relief Option?

For many people, bankruptcy is the best answer to overwhelming debt, but that is not true for everybody. If you are questioning whether you want to put yourself into the position of having a bankruptcy on your credit report for several years, you might want to consider some of these other debt relief options.

Credit Counseling – For some people, out of control debt is less an issue of insufficient income and funds than it is simply not knowing how to manage their finances. If you fall into this category, then credit counseling can make a real difference. When you meet with a credit counselor, they will sit down with you to review all of your debt and your available income, advising you as to how to cut down on unnecessary expenses and spending, prioritizing high-cost debt as the first that needs to be paid and helping you to create a budget and plan that will allow you to get out from under your bills. They will often contact your creditors to see whether they can negotiate a reduction in rates or extend payment terms to make repayment easier for you.
Consolidate your bills – Debt consolidation is a step that combines all of your outstanding debt into a single debt. This essentially restarts the clock and eliminates varying interest rates, giving you a single monthly payment to be made and managed. You can arrange to consolidate your debts in a number of ways, including taking out a personal loan from a bank with which to pay off existing debts, then only needing to pay the bank back; or combining all of your debt into one credit card.
Debt settlement – This type of debt relief is managed by a debt settlement company, which essentially arranges for debt consolidation on your behalf. The process involves discontinuing your payment of your debts and instead making payments into an escrow account that will grow to the point where the company can offer to accept the amount that you’ve saved up to discharge your debt. For many creditors, taking something is better than taking nothing, especially as it allows them to discontinue costly collection efforts and to write off their loss.
Fair Debt Collection Practices Act – If you’re less concerned about your debt then you are about the annoying or intimidating phone calls you’re getting from collection agencies or your creditors themselves, this law gives you a potent weapon against them, keeping them from calling between the hours of 9 p.m. and 8 a.m., preventing them from using abusive language or threatening you with violence, and forbidding them from calling you at work if that is against your employer’s standards, among other things.

If none of these debt relief options seems right for you, or if you’re still unsure our team can help you sort it out. Contact us today for more information and find out if bankruptcy can help you!

Differences Between Corporate and Personal Bankruptcy

We tend to think of corporations as being very different from people – and they are, in a lot of ways. But there are also a lot of commonalities between individuals and businesses too, and one is that both can get into big money trouble. No matter whether you’re an individual or a corporation, if you get yourself into insurmountable debt you have the option of filing for bankruptcy. But there are significant differences in the types of bankruptcy available to each, as well as the rules for qualifying.

When an individual can’t pay their bills, there are two options for filing for personal bankruptcy: Chapters 7 and Chapter 13. If they feel that they just need an adjustment to the amount of time they have available to pay off the debt, they can opt for Chapter 13, which reorganizes their debt by extending their payment terms, or lowering their interest rate, or even reducing their total debt. Chapter 7 is available for those who know they simply will not be able to pay off their debt. They may have to liquidate assets in order to pay some of what they owe to their creditors.

When a corporation can’t pay off their debt, they also have two options, and like individuals they can choose Chapter 7. But if a corporation chooses to file for Chapter 7 bankruptcy that means that they are closing their business down entirely, with no hope of reopening. By contrast, they can choose a Chapter 11 bankruptcy that reorganizes their debts under a plan that represents their own proposal as well as input from their creditors.

Though the options available to corporations and individuals seem very similar, there are some very important differences between the two. The first is that businesses have the ability to get out of contracts with their creditors if both agree to that happening. Individuals aren’t able to do that – if they have a contract to pay student debt, or taxes, alimony, child support, and other kinds of debt, bankruptcy will not let them escape their obligation. Individuals are also required to submit to a “means test” that is not required of corporations. Means tests involve submitting detailed financial information to the bankruptcy court so that it can be determined which of the two available bankruptcy chapters the individual qualifies for. An individual can’t just say that they want to file under Chapter 7: They have to prove that they are unable to pay what they owe.

If you need information about the best option for your financial situation, we can help. Contact us today to set up a time to discuss your situation.

What Does a Bankruptcy Attorney Help With?

If the idea of bankruptcy has crossed your mind more than a few times, there’s a good chance that it’s something that you need to pursue. Maybe you’ve gone so far as to Google a few sites and articles to learn what is involved, then closed the computer again because the whole thing seemed too overwhelming. If that’s the case, or something close to it, then it’s time for you to seek guidance from a bankruptcy attorney.

A bankruptcy attorney will help in many ways, starting with reviewing your situation and advising you as to whether bankruptcy is the right step for you and explaining other options you may have. One of the first steps of every bankruptcy case is determining whether your situation is more appropriate for a Chapter 7 bankruptcy filing or a Chapter 13 bankruptcy filing.

Your bankruptcy attorney will assess all of your assets and holdings to determine whether the bankruptcy trustee is likely to want to sell any of your property and to help you navigate the process of holding on to the things that are most important to you. If you are a business owner they will help you to understand what you need to do if you intend to continue running the business or, conversely, if you want to liquidate everything.

Whether your situation is straightforward or complex, a bankruptcy attorney will be able to leverage their knowledge and experience to make things as simple as possible for you, handling the paperwork, telling you what to expect, explaining delays and other complications, and representing you in court. Though bankruptcy proceedings do not require the use of an attorney, having the help of somebody who knows and understands the bankruptcy code and laws makes an enormous difference in your chance of having a successful filing.

Perhaps most important of all, when you choose an experienced and empathetic bankruptcy attorney, they will understand your anxiety and stress and help you see that filing for bankruptcy represents a fresh start and new beginning. They will allay your fears and answer your questions, explaining all of the benefits that filing for bankruptcy can provide and all the ways that it will eliminate the issues that have been negatively impacting your quality of life. For information on how we can be of help, contact us today to set up a time for a consultation.

How to Start Saving Money After a Bankruptcy

Going through bankruptcy proceedings is an emotionally exhausting, sometimes traumatic event. No matter whether you got into financial trouble through bad decisions or through no fault of your own (medical event, job loss, etc.), you still have had to go through the process of putting all of your assets, income and debt on display and agreeing to either an extended payment plan under Chapter 13 or the loss of some of your assets under Chapter 7.

The good news is that once you’ve gone through the process you have the chance to make a fresh start, and that should begin with building savings. After what you’ve been through, that may sound more easily said than done – but with a little diligence, consistency and purpose you’ll be able to do it. Here are some pointers to help you get started.

Begin by creating a budget. Make a list of all of your expenses – no matter how big or small and add them up. Then write down your net income. How do they compare? If you are bringing in less money than you are spending, you have a problem. You will need to eliminate some of your expenses. Go through your list and see what can be eliminated, or even cut down. If you have to pay for cable and internet, you might be able to cut out some channels. If you have a newspaper subscription you might be able to save by going strictly digital. Your goal is to get your expenses below your income.
Open a savings account and deposit your extra income into it every week. The extra income that exceeds your expenses needs to be deposited with the same attention that you give to paying for your other bills. Treat savings as an obligation, not an option.
Avoid applying for credit cards. When your finances are tight, it is very tempting to apply for a credit card so that you can buy the things you can’t afford. Don’t do it! This is how you can get into trouble. If something isn’t in your budget and you truly need it then you can use your savings. If you don’t need it, then not having a credit card will prevent you from lapsing into biting off more than you can financially chew.

If you’re considering bankruptcy, our experienced attorneys can help guide you to a solid financial future. Contact us today!

What Type of Bankruptcy is Best for Credit Card Debt?

Credit cards have unquestionably made our lives easier – and for some of us, it may have made life too easy. The temptation to simply reach into our pockets and pull out a card to pay for something we want can quickly lead to debt that gets beyond our ability to pay. If this has happened to you – whether as a lack of discipline or in response to a need that is out of your control (such as a job loss or illness), your best option may be to file for either Chapter 7 or Chapter 13 bankruptcy. The two are significantly different, and the appropriate one will be determined by your individual circumstances.

The biggest difference between Chapter 7 and Chapter 13 bankruptcy is that a Chapter 7 filing will discharge your debts in exchange for liquidating existing assets, while Chapter 13 bankruptcy represents a reorganization of debts and allows you to retain assets. In plain language, this means that under Chapter 7 you no longer have an obligation to pay but you also have to make significant sacrifices, and under Chapter 13 you agree to continue paying over a period of time.

Though Chapter 7 may sound like a better answer – and an easy way to eliminate your credit card debt – when you file for bankruptcy you will have to detail all of your debts, income and assets. You may not qualify for Chapter 7 bankruptcy if your income is high enough for a payment plan to work, in which case you will be forced to turn to Chapter 13, agreeing to pay off debts over a three-to-five-year period. Once you’ve filed you will put a stop to all collection efforts, but your creditors will be able to request the liquidation of your assets, so it is a good idea to do a thorough analysis of your economic situation prior to commencing any kind of bankruptcy. You should also recognize that any debt that you have accumulated on your credit card immediately prior to filing for bankruptcy will be closely reviewed to determine whether your expenditures were for necessities or luxuries. If you decide to run up your credit card with expensive items prior to filing, those purchases will be spotted, and will likely be discharged.

If you are facing credit card debt that feels insurmountable, we can help guide you to the solution that is best for your situation. Call us today for help in determining your best legal options.

Should I Consider a Mortgage Modification?

When you applied for your mortgage, you did so based upon your income and assets at the time. That was the same data that your mortgage lender used to approve your mortgage, and when all of the paperwork was done you knew exactly what your monthly payment would be. Though both sides entered that arrangement with the expectation that none of the basics would change, sometimes circumstances intervene and people fall on hard economic times. If that has happened to you, a mortgage modification may be worth your consideration.

A mortgage modification allows you to change the terms of your existing loan in a way that maintains the same debt, but makes it easier for you to continue paying it. There are a number of different changes that can be made to accomplish this, including extending the length your loan’s term, reducing the rate of interest on the money that you have borrowed, or simply switching from an adjustable-rate mortgage to a fixed loan so that you don’t have to fear your mortgage payment increasing. Unlike refinancing, which replaces your existing loan with a new one, a mortgage modification represents a negotiation with your lender to make it more affordable for you to continue with the existing loan.

Asking your lender to consider a mortgage modification is an intimidating proposition – homeowners fear that letting their lender know that they’re struggling to pay their loan may result in action being taken against them. The truth is that your lender would likely prefer to work with you than to take action against you. Banks don’t generally like foreclosure, which is an expensive, time-consuming process. A mortgage modification is frequently a much better answer for all involved.

Qualifying for a loan modification is not as simple as just asking for it. Eligibility requires that the borrower is either already delinquent or is about to be delinquent as a result of a job loss, the loss of a spouse, an illness or disability or some other verifiable reason for an inability to pay based on your loan’s existing terms. The resulting modification, if approved, may be a temporary fix or may make permanent changes to your loan, and may be facilitated directly by your bank or loan servicer or through an assistance program such as the Flex Modification program offered by both Fannie Mae and Freddie Mac to homeowners whose loans they guarantee.

Keep in mind that a mortgage modification may reflect negatively in your credit report, though certainly not to the same extent that foreclosure or delinquency on your mortgage would. To find out more, contact your bank or mortgage servicer to ask about the availability of a mortgage modification, or contact our office to inquire about how we can help.

Can I File for Bankruptcy During the COVID-19 Pandemic?

It’s hard to find much positive to say about the COVID-19 global pandemic, but one good thing is its timing from a technology perspective. The internet and the advent of advanced communications technology have made it possible for us to keep in touch with loved ones, tp have telemedicine appointments with physicians, and to continue doing business of all kinds, including filing for bankruptcy. Accommodations have been made to previously stringent rules, and that means that doctors are willing to write prescriptions without actually seeing patients, schools are willing to let students take tests without being proctored, and courts are allowing those who are in isolation to file bankruptcy papers and have lawyers represent them without having to actually leave their homes.

The easing of existing requirements won’t be of help to those who intended to represent themselves in bankruptcy proceedings: it will be necessary to rely upon a bankruptcy attorney to accomplish your goal. The good news is that you will be able to interview most bankruptcy attorneys online, and you can do your due diligence by reading reviews on social media, as well as by asking friends or family members about their experiences or knowledge of reputable attorneys who have helped them or people they know to get past their debt problems. When you make contact with these attorneys, make sure that you ask them about their willingness and ability to proceed on your behalf while you remain at home. Attorneys who are unable to make this accommodation for you should be thanked for their time and then bypassed unless you have time to wait for the COVID-19 crisis to pass.

Attorneys who are able to help you will make use of email, scanning of documents and other technology tools to make sure that all of the necessary paperwork that is required by the bankruptcy court can be sent back and forth between you, your attorney, the courts and your creditors. You will also still need to take credit counseling and debtor education courses as part of the process, and those are also available online.

Though it may feel strange to go through such an important legal proceeding without ever meeting an attorney in person or going to court, filing for bankruptcy is a process that is best done as quickly as possible so that you can move ahead with a fresh start on your financial health. For information on how we can help, contact us today.

How Complicated is the Bankruptcy Process?

There’s nothing quite as scary as the unknown, and that is as true of the bankruptcy filing process as of anything else. That’s one of the reasons that it’s smart for anybody considering filing for bankruptcy to consult with an experienced bankruptcy attorney who can explain what is involved and provide invaluable guidance.

The good news about bankruptcy is that it is a highly formulaic process. There are steps that need to be followed, and they are entirely predictable. The downside is that they require significant attention to detail, and if you miss a step or make a mistake while preparing the many documents that are required, it could end up costing you more money or taking you more time. Here are the basics.

Choose between Chapter 7 and Chapter 13 for your bankruptcy filing. Chapter 7 is usually a better choice for people who want to discharge all of their debts and not be responsible for any of them. Though you may have to sell off some assets, many of the things that are most important to you – like your house or car – may be exempt. Chapter 13 lets you keep more of your things but you end up continuing to pay for most of your debts under a new payment plan, over time.
Take a credit counseling course. This is required before you can actually file for bankruptcy, and can be done online. The cost of the class is minimal, but you will need a certificate to show that you have completed the course.
Collect all appropriate documents, including bills and papers that demonstrate your debts as well as your assets.
Fill out all of the required bankruptcy forms and file them according to the rules posted on the bankruptcy court’s website.
As soon as the paperwork is filed there will be an automatic junction to stop creditors from any further collection activities.
Meet with the bankruptcy trustee to discuss the sale of any non-exempt assets. The trustee will use the proceeds of those sales to satisfy debts.
Allow time for creditors to object to the bankruptcy filing.
Take a course on financial management. This class can be taken online.
Debts are discharged, with the exception of child support, alimony, some taxes and student loan debt. These are not dischargeable.

This quick summary just scratches the surface of the bankruptcy process. For more information, contact us today to set up a time to discuss your situation.