Debt Counseling, Business Reorganization & Workouts
Workouts and reorganization offer alternatives to bankruptcy that allow for continued business operations. Should insolvency loom, debt can be reorganized through an out-of-court workout or restructuring. Debtors may enter into contracts with creditors to manage debt obligations. Bankruptcy, receiverships and other tools may be used by businesses to achieve reorganization, liquidation or sale. We counsel financially distressed businesses, creditors and third parties on devising and implementing strategies to regain stability.
This process involves the liquidation of non-exempt assets. For individuals, the goal is discharge of all eligible debt. Individual consumers are required to take a consumer credit counseling course prior to filing and must meet certain standards to file under this chapter. For example, an individual may have secured debt such as a car loan. In Chapter 7, most car loan lenders will require the client to sign a reaffirmation agreement to keep the car. This process is subject to review by the court. If approved, the client would then be responsible for any shortfall in the event of a future default. While Chapter 7 filing is also available to corporations, partnerships and limited liability companies, business operations must cease upon filing because the business assets fall under the jurisdiction of a Chapter 7 trustee.
Chapter 11 shares with Chapter 13 the same premise of securing a repayment plan to creditors, but the Chapter 11 process is highly complex and involves shorter timeframes. The client typically proposes a repayment plan to for court approval and creditor acceptance. While most often used by businesses that believe they have a chance to rehabilitate the company, this chapter is also available to high-income individuals who do not otherwise qualify for Chapter 13.
With extensive experience assisting our clients in the Chapter 11 process, be they corporations, partnerships, limited liability companies, not-for-profit organizations or individuals, we offer clients savvy advice grounded in property, business, tax, and bankruptcy law.
Limited to a "family farmer" as that term is defined in the Bankruptcy Code, Chapter 12 involves securing a repayment plan with creditors. Payments are then made to a Chapter 12 trustee who in turn disburses the funds to creditors.
Chapter 13 is available only to individuals, up to a set debt amount limit. Repayment plans to creditors are limited to five-year terms. Payments are made to a Chapter 13 trustee who then distributes the funds to creditors. As with Chapter 7, debtors are required to take a consumer credit counseling course. The debtor need not surrender non-exempt assets as is required in under Chapter 7, but must meet the "best interest of creditors" test. This test requires debtors to pay creditors at least the same amount as they would under Chapter 7. The most commonly used advantage of Chapter 13 is the right to stop a foreclosure and pay arrears under the repayment plan. Our multi-faceted approach to both real estate transactions and bankruptcy helps clients get back on the road to financial health.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.