It is quite common for those who have taken the plunge and opened their own business to end up in bankruptcy.  In fact, if you think about it, without bankruptcy laws, how many entrepreneurs would be willing to make the leap and start their own business?  If you could never escape the business debts incurred in starting up a business, the risk would simply be too great.

So the question then, if you own a business, and file for bankruptcy personally, what will the impact be to the business?  Much depends on the chapter you personally file under.

Chapter 7 Bankruptcy

In a Chapter 7 case all of your assets become property of the “bankruptcy estate.”  The bankruptcy estate includes things like your home, your cars, your furniture, and pretty much everything you own.  If you own a business, your ownership interest in that business becomes part of the bankruptcy estate.  For instance, lets say you own a 50% interest in a Limited Liability Company (LLC) or you are 100% shareholder in a corporation.  Your ownership interest in the company would become part of your bankruptcy, and would be an asset that the trustee in your case could look to liquidate.  The trustee could look to auction off your interest in the company, or in the alternative you could pay the bankruptcy estate the value of your business to retain your ownership interest in the company. 

Depending on the type of business you have, your ownership interest may have a lot of value or very little value.  For instance, if you business is a service based business, it may have very little liquidation value.  Essentially, you are your business and if you are taken out of the equation, there isn’t much value.  On the other hand, your business may have inventory or equipment that has significant value whether you are there are not.  It is this latter type of business that will more likely than not be the type the trustee will have an interset in.

Chapter 13 Bankruptcy

In a chapter 13 bankruptcy you will remain in possession of your assets.  So, unlike the chapter 7 bankruptcy process described above, you will not have to worry about the trustee liquidating your interest in your business.  This does not mean that the value of your business is irrelevant though.  You will still have to value your interest in your business and this will influence the amount you are required to pay your creditors through your chapter 13 plan.  My recommendation for most business owners is a chapter 13 so as to avoid the risks associated with a chapter 7 bankruptcy.

I offer a free consultation where we can discuss your specific situation and you can learn more about the bankruptcy process and its impacts upon you and your business. 

Attorney John Skiba can be reached at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com .

We are a Debt Relief Agency.  We help people file for bankruptcy relief under the Bankruptcy Code (11 U.S.C. 528(b)(2)(B)).  The services, benefits, or assistance we provide in connection with consumer debts may involve bankruptcy relief under the Bankruptcy Code

For those of you researching or looking into the possibility of filing bankruptcy, you will have likely seen much written about a trustee that will be involved in your case.  All Chapter 7 and Chapter 13 bankruptcy cases are assigned a trustee that falls under the direction of the Department of Justice. 

Chapter 7 Bankruptcy

In Chapter 7 cases, the role of the trustee is to obtain information and documentation from the debtor in order to verify the information disclosed in the bankruptcy petition and schedules.  Further, the trustee will preside at the Meeting of the Creditors (sometimes referred to as a 341).  At the Meeting of Creditors the trustee will place the debtors under oath and ask various questions relating to the truthfulness of the information provided to the bankruptcy court as well as inquire into specific assets.  Typically this is a very short meeting.  The Chapter 7 trustee will also determine if there are any reasons to object to the exemptions claimed by the debtor or if there is a reason to object to a discharge being entered.  In the Chapter 7 bankruptcy cases where there are assets to distribute, the Chapter 7 trustee will oversee that process as well.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the role of the trustee is much different.  While the trustee will review the initial documents filed and preside at the Meeting of Creditors, the trustee will also evaluate the Chapter 13 plan you have proposed, make recommendations, review claims submitted by creditors, accept your monthly payment, and distribute the monies received from your monthly payment to creditors.

In bankruptcy, the trustee is neither your advocate nor your foe, but takes more of an administrative role in processing your bankruptcy case. 

If you would like more information on Chapter 7 bankruptcy, Chapter 13 bankruptcy, or general questions about your specific situation, please do not hesitate to contact bankruptcy attorney John Skiba at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com .

When I meet with clients I discuss how it is important that they disclose all of their assets, all of their debts, and be completely truthful on the information that we provide to the court.  Periodically after I give this admonition a client will ask “but how will the court know I have an asset if I don’t put it on my schedules?”  The short answer is, because you just told me.  While your attorney in the bankruptcy proceeding is your advocate before the court and is there to help you through the bankruptcy process, attorneys are governed by strict ethical rules as well as under the bankruptcy code be completely honest in its dealings with the court — even if that means disclosing assets that you don’t want disclosed.

 Failure to Disclose Assets in a Bankruptcy Case is a Felony

 Not only is it unethical to conceal assets, it is also a crime.  You will be required to sign your bankruptcy documents before they are filed by your attorney.  By signing those documents you are attesting that everything in them is true and correct to the best of your knowledge.  Your attorney, the bankruptcy court, and the US Trustee’s office take this oath very seriously, and so should you.  The penalties for intentionally concealing assets in a bankruptcy case can result on the low end to the dismissal of your case and the denial of a discharge (the whole purspose you went through this process) to being charged with a crime and face prison time.  Judges do not have a problem with handing down prison terms for those who are intentionally concealing assets. 

 I Forgot to Include an Asset, Now What?

 It is not uncommon that after a case is filed a client will approach me and inform me that they had forgotten about an asset or just simply failed to include it their paperwork.  If this happens to you, let your attorney know so that he/she can amend your filings with the court.  In situations where there has been an honest mistake the amendment of the court documents will usually suffice and your case will continue on.

 When in Doubt, Disclose

 When you are meeting with your attorney in the beginning stages of bankruptcy, disclose EVERYTHING.  More times than not, if there is a problem, if you disclose it prior to filing your bankruptcy case your attorney can advise you of the best route to go and help you avoid a lot of stress and heart ache down the round.  Most problems can be solved prior to filing, however after the case is filed it can be more difficult.  Put trust in your attorney and disclose all assets, all debts, and all information your attorney needs to prepare your bankruptcy documents.While in Arizona it is not the norm for a trustee to visit your home and take an inventory of your items, recently a case arose where a trustee was informed by an ex-spouse that the Debtor had failed to list various assets.  The trustee showed up at the Debtor’s home, unannounced, and was able to locate significant amounts of undisclosed property.  This could result in significant problems for this Debtor. 

Bankruptcy can be a fairly straight forward process with few bumps in the road.  However, the easiest way to cause a delay in your discharge order being entered and possibly more severe sanctions is to fail to disclose all of your assets.  Disclose, disclose, disclose…

Attorney John Skiba offers a free consultation to discuss bankruptcy and your specific situation.  To schedule a free consultation contact Mr. Skiba at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com .

We are a Debt Relief Agency.  We help people file for bankruptcy relief under the Bankruptcy Code (11 U.S.C. 528(b)(2)(B)).  The services, benefits, or assistance we provide in connection with consumer debts may involve bankruptcy relief under the Bankruptcy Code.

     A common question I get asked of my clients with significant credit card debt is whether it would be more appropriate to try and settle with the credit card companies or to even hire a debt settlement company to help them negotiate with creditors.  Often I have found that the debt settlement route leaves a lot to be desired.  If, for instance, you have $25,000 in credit card and would like to try and settle this debt, typically the creditor will settle for 40% – 60% of the total balance owed — and that is if you can pay it in a lump sum.  If you want a payment plan you will not get such a discount (and in all likelihood they will not even offer any type of extended payment plan).  So with credit card balances of $25,000, you would need $10,000 to $15,000 in order to settle the debt.  Another hurdle arises if you have multiple credit cards.  If you have 5 credit cards, and can only get 3 of them to settle, you are still left with the other two to pay in full.

     If you don’t feel that you can go it alone in debt settlement, and would like to hire a debt settlement company, it is important to understand how these companies work.  In essence debt settlement companies are a way to save the money that is necessary to settle your debts.  The debt settlement company will review your debts and estimate what it will take to settle the debt (usually that 40% – 60% number).  They will then have you begin submitting a monthly payment to them, which they will then hold until they have sufficient funds to contact your creditors and try and settle the debt. 

     It is very important for you to understand that during the time it takes for you to accumulate enough money through the debt settle company to settle the debt, that your creditors will continue their collection efforts against you.  This means that they will be reporting negative information to the credit bureaus which will harm your credit, they will continue to call you all of the time, and they may even sue you.  Routinely I meet with clients who have hired a debt settlement company, begin making monthly payments to this company, and then are shocked when 5 months down the road they get sued by a credit card company. 

    Also, the debt settlement company does not work for free.  Often they will take a percentage of the total amount of debt, usually around 15%.  So, using our $25,000 number from above, you would be required to pay $3,750 (15% of $25,000), plus the $10,000 to $15,000 to settle the debt.  Additionally, your credit has been substantially harmed during the saving period when you are not making your payments.  The debt settlement route will damage your credit and you will be required to pay $13,750 up to $18,750 to settle a $25,000 debt (assuming you can even come up with that money).

     In contrast, a Chapter 7 bankruptcy will stop all collection efforts against you the moment your case is filed.  The Bankruptcy Code provides for an automatic stay to be issued which stops any lawsuits, repossessions, foreclosures, demand letters, and even telephone calls (yes, the calls will stop!).  Further, in most Chapter 7 cases, there is $0 paid to you credit cards.  No long drawn out repayment process, and no risk of being sued during your bankruptcy.  Finally, the legal fees for filing bankruptcy in Arizona typically are about $2,000 plus another $500 in costs.  In comparison, debt settlement will costs you any were from $13,750 to $18,750 while a Chapter 7 bankruptcy will likely run about $2,500, total.

     With all this being said, bankruptcy is not right for every situation, and periodically I will see situations where I will recommend settlement.  Typically these situations are when there are few creditors, minimal debt, and the client has the money to settle already saved.  Bankruptcy will damage your credit, but it is important to realize that bankruptcy is a static event, the further you get away from your filing date the more you will recover.

     There is no easy way out a difficult debt situation.  However, I have too often seen clients spend a lot of money in hiring debt settlement companies only to see them lose their money, damage their credit, and often get sued in the process.  I offer a free consultation where we can discuss if bankruptcy is appropriate for your specific situation. 

     Attorney John Skiba can be reached at (480) 464-1111.

     I often hear or read discussions on whether it is truly necessary to hire an attorney when filing for bankruptcy.  After all, most people who are contemplating bankruptcy don’t have a lot of extra cash lying around.  While I am clearly biased in attempting to answer this question, I wholeheartedly recommend that you seek out an attorney to represent you through the bankruptcy proceedings.  There are three reasons why I would recommend seeking representation: (1) bankruptcy can be very complex; (2) you may be at risk of losing your personal belongings; (3) your creditors have attorneys representing them.

     First, bankruptcy law can be very complex.  There are cases that are quite straight forward without much in the way of legal complexities.  However, many cases are complex.  The bankruptcy code, like most federal legislation, is lengthy and at times quite difficult to follow.  If you are not familiar with the Code and the requirements under the Code, you could end up making a mistake that could result in your case being dismissed.  In addition to the bankruptcy code, there are local rules which apply to cases filed in Arizona that may change how a bankruptcy code provision is dealt with in Arizona.  And finally, there are local customs between the bankruptcy attorneys, courts, and trustees as to how cases are handled.  Having a bankruptcy attorney there to guide you through this bankruptcy process is worth the cost.

     Second, if you make a mistake, it may cost you your personal belongings.  In Chapter 7 bankruptcy cases, if you have property that you own free and clear of any liens or encumberances, you may be required to turn that property over to the bankruptcy trustee to be sold and paid to your creditors.  However, Arizona has exemption laws that deem most people’s property as “exempt”, meaning that the trustee would not be able to take it.  If you fail to exempt your property correctly you may lose it to your creditors. 

     One time I was down at the bankruptcy court with a client attending hearings before the trustee.  There was a person meeting with the trustee right before he was to meet with my clients.  The trustee noted that this person owned a parcel of land free and clear and had just recently sold his home.  The trustee informed the person that he would be auctioning off the parcel of land and distributing the proceeds to his creditors.  The person was shocked, and said “but I am claiming my homestead exemption in the parcel of land, so that I can keep it!”  The trustee then informed him that the homestead exemption in Arizona does not apply to vacant land, and thus he would be losing the property.  You can avoid tragic situations like this by having competent counsel to guide you through the bankruptcy process.

     Third, it is a good idea to have an Arizona bankruptcy lawyer representing you because your creditors will have attorneys representing them.  While many, if not most of your creditors, will not make an appearance in your bankruptcy case, creditors who are owed money on a mortgage loan, a car loan, and some business loans, will likely make an appearance to protect their client’s rights in the asset that you hold (i.e. your house or car).  Further, your creditor’s attorney may determine that they should be permitted to repossess your car or foreclose on your house, even while you are in bankruptcy.  They will have to file documents with the court to get this permission, and it will be a tremendous help to have someone on your side in addressing these issues.

     Many of us would not attempt to do things like car repairs on our own, but will jump right in when it comes to representing yourself in federal court.  It is understandable that because of the financial distress you are going through that you would not want to pay more money out to an attorney, but in the end it may end up costing you more than what the attorney would have charged you.  I, like most bankruptcy attorneys, charge a flat rate for bankruptcy representation, meaning that you will know exactly what the entire bankruptcy case will cost you before you file.

     If you would like a free consultation Arizona bankruptcy attorney John Skiba would be happy to meet with you to discuss your specific situation and determine if bankruptcy is a good option for you.  Mr. Skiba can be reached at 480-464-1111 or via email at jskiba@jacksonwhitelaw.com .

     As a person who has incurred significant student loan debt, I know first hand the pain that my client’s feel when they come in with significant student loan debt.  Education costs continue to rise while pay doesn’t seem to be keeping pace.  Further, if you are in a situation where there has been a change in circumstances or a physical injury that is preventing you from working, repaying student loans may seem impossible.

Can Student Loans Be Discharged Through Filing Bankruptcy?

     Most are aware that student loans are not discharged through the bankruptcy process.  Section 523 of the Bankruptcy Code specifically excludes both government and private student loans from being discharged (or eliminated) through bankruptcy unless the student loans would “impose an undue hardship” on the debtor and the debtor’s family.  If I were to ask 10 families if their student loans imposed an undue hardship on their families I would guess 9 out of 10 would say yes.  That being said, the bankruptcy court’s definition of undue hardship is much different than mine and yours.

A Case Story of Student Loans and Bankruptcy

     While I was in law school I served as an extern for the bankruptcy court in the District of Nevada.  This was a great opportunity to witness a bankruptcy judge deal with these types of issues on a daily basis.  One time an attorney who had been severely injured in a car accident filed for bankruptcy and sought to have her student loans from law school discharged.  The court held a hearing where the attorney testified that she was a paraplegic due to the car accident and had suffered additional significant injuries that made continuing on in her law practice very difficult if not impossible.

     After two days worth of testimony the court ruled that while the attorney’s injuries were significant, they did not impose such an undue hardship so that the attorney could not continuing working.  The court cut the lawyer’s student loans in half, leaving approximately $45,000 left to pay.  I recite this story to demonstrate that the “undue hardship” that the student loans must impose will have to be significant to garner any sympathy from the bankruptcy court.  For most, if you can work and earn money you will end up paying your student loans and they will not be discharged through the bankruptcy case.

Options For Dealing With Student Loans During Financial Distress

     With all that being said, student loans are not like most loans in that there are programs and options that may help you if you run into financial difficulties and cannot pay your loans.  I would recommend starting at http://www.studentloanborrowerassistance.org/  to get information that will help you in dealing with your student loans.

     Arizona bankruptcy attorney John Skiba offers a free consultation to discuss your student loan problems or any other financial set back as well as the bankruptcy options that can help you recover.  Mr. Skiba can be reached at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com.  Mr. Skiba helps clients in the filing of Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Fair Debt Collection lawsuits.

We are a Debt Relief Agency.  We help people file for bankruptcy relief under the Bankruptcy Code (11 U.S.C. 528(b)(2)(B)).  The services, benefits, or assistance we provide in connection with consumer debts may involve bankruptcy relief under the Bankruptcy Code.

I recently listened as a bankruptcy trustee grilled a gentleman (not one of my clients) who had stated that he owned no assets: no cash, no checking accounts, no clothes, no car, nothing.  As you might expect, it wasn’t true.  He had bank accounts, clothes, and other property, though it probably didn’t amount to much.  He also drove to work and back, but explained that the car he used was “in my Mom’s name.”

If you are in financial difficulties, you will often get advice from friends and family.  You may be told that you can choose what to “include” in your bankruptcy case; that you will lose everything you list; that you should put your belongings in someone else’s name; or that you can “just say” that something belongs to them or “put it down as … .”

All of this is bad advice.  The Bankruptcy Code allows you to have a fresh start, but the price is an honest and complete disclosure–under oath–of all of your assets and liabilities.  Giving inaccurate or incomplete information can result in dismissal of your bankruptcy case, denial of discharge, and even criminal penalties.

The advice is also bad because the Bankruptcy Code does not require debtors to surrender everything they own when they file.  Many of the common necessities are exempt assets, which you can keep even in bankruptcy.  Legitimate planning can also improve your situation in bankruptcy.  For such planning to succeed, it should be designed with your Arizona bankruptcy attorney so that a trustee with all of the facts (many of which are required to be disclosed at the outset) would conclude that you have complied with the Bankruptcy Code.

In short, the gentleman who listed no assets may face serious consequences solely because he was trying to hide assets which, if properly disclosed, he may have been entitled to keep.

Arizona bankruptcy lawyer Kelly G. Black offers a free bankruptcy consultation in which to discuss your specific situation.  He can be reached at (480) 559-8131 or (877) 612-9872.

We are a Debt Relief Agency.  We help people file for bankruptcy relief under the Bankruptcy Code.  The services, benefits or assistance we provide in connection with consumer debts may involve bankruptcy relief under the Bankruptcy Code.

I recently listened as a bankruptcy trustee grilled a gentleman (not one of my clients) who had stated that he owned no assets: no cash, no checking accounts, no clothes, no car, nothing.  As you might expect, it wasn’t true.  He had bank accounts, clothes, and other property, though it probably didn’t amount to much.  He also drove to work and back, but explained that the car he used was “in my Mom’s name.”

If you are in financial difficulties, you will often get advice from friends and family.  You may be told that you can choose what to “include” in your bankruptcy case; that you will lose everything you list; that you should put your belongings in someone else’s name; or that you can “just say” that something belongs to them or “put it down as … .”

All of this is bad advice.  The Bankruptcy Code allows you to have a fresh start, but the price is an honest and complete disclosure–under oath–of all of your assets and liabilities.  Giving inaccurate or incomplete information can result in dismissal of your bankruptcy case, denial of discharge, and even criminal penalties.

The advice is also bad because the Bankruptcy Code does not require debtors to surrender everything they own when they file.  Many of the common necessities are exempt assets, which you can keep even in bankruptcy.  Legitimate planning can also improve your situation in bankruptcy.  For such planning to succeed, it should be designed with your Arizona bankruptcy attorney so that a trustee with all of the facts (many of which are required to be disclosed at the outset) would conclude that you have complied with the Bankruptcy Code.

In short, the gentleman who listed no assets may face serious consequences solely because he was trying to hide assets which, if properly disclosed, he may have been entitled to keep.

Arizona bankruptcy lawyer Kelly G. Black offers a free bankruptcy consultation in which to discuss your specific situation.  He can be reached at (480) 559-8131 or (877) 612-9872.

We are a Debt Relief Agency.  We help people file for bankruptcy relief under the Bankruptcy Code.  The services, benefits or assistance we provide in connection with consumer debts may involve bankruptcy relief under the Bankruptcy Code.

The goal when filing for bankruptcy is to obtain a “discharge” of your debts.  The discharge order is simply the order provided by the bankruptcy court to those debtors whom the court has determined qualify for the discharge.  How you get to the discharge depends on what chapter under the bankruptcy code you filed your case.

Chapter 7 Bankruptcy:

If all goes well, you will typically get your discharge in a Chapter 7 bankruptcy case within approximately five months from the day your case was filed.  In order to qualify for the Chapter 7 discharge you must comply with the requests for documents made by your trustee and complete a financial management course.  Assuming that you meet all other qualifications of a Chapter 7, your discharge will be entered at the end of your case.

Chapter 13 Bankruptcy:

In a Chapter 13 case you will not receive your discharge until you successfully complete your chapter 13 repayment plan. The chapter 13 cram down tool is also available to reduce debt. In a Chapter 13 bankruptcy you will propose a plan as to how you will pay your creditors and how much each creditor will receive. Your payment plan will typically be at least 36 months and may extend up to 60 months.  After you have completed all the required monthly payments your discharge will be entered.

Once you have your discharge the creditors that held claims against you are generally not permitted to seek payment.  Essentially you don’t owe the money any more (it has been discharged) so they cannot try to collect it.  Creditors are not permitted to call you, write you letters demanding payment, sue you, etc.  If they do, they are in contempt of the discharge order entered by the bankruptcy court.  It is illegal for creditors to continue to collect on a discharged debt and the bankruptcy court can sanction them for doing so, including requiring the creditor to pay your attorney’s fees.

If you have been through a bankruptcy and received a discharge and continue to have collectors trying to collect on a discharged debt I would be happy to meet with you to discuss your options.  Often I can take these cases with no money down and do not charge you any attorney’s fees unless we collect on your behalf.  I offer a free consultation to dicuss your particular situation. Arizona bankruptcy lawyer John Skiba can be reached at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com .

     Home owners have been hit hard in the loss in value in their homes.  The recession has resulted in very few home owners having positive equity in their house.  The same is true for most when it comes to their vehicles.  Even in good times car values nose dive pretty much from the day we purchase them.  Further, banks continue to extend the terms on car loans.  It used to be that it was rare to see a loan longer than 36 -60 months.  Now I routinely see loans of 72 months up to 96 months!  Many of these long term loans come with high interest rates and payments approaching (and sometimes exceeding) $1,000 per month.  This is a tough payment to swallow when the value of the vehicle has depreciated significantly; this is especially true with SUVs and trucks.

     Both Chapters 7 and 13 under the Bankruptcy Code provide for the vehicle owner to keep the vehicle but only pay what the vehicle is worth, not what is actually owed, and significantly reduce the interest rate on the loan.  This can save thousands in the total amount paid and years off of the term of the loan and make that SUV or truck worth keeping.

Chapter 7 Bankruptcy

     In a Chapter 7 bankruptcy case, car owners are permitted to “redeem” their vehicles.  11 U.S.C. 722 provides that a car owner in a Chapter 7 bankruptcy can pay the holder of the note on the car the full amount of what it is worth at the time the Chapter 7 bankruptcy case was filed.  For instance, if you own a Ford F350 truck that you owe $35,000 on, but Kelley Blue Book estimates that the truck is only worth $15,000, if you can pay the full $15,000 in a lump sum the remaining balance owed will be discharged through the bankruptcy.  Of course most people who are in a Chapter 7 bankruptcy don’t have $15,000 lying around, so that begs the question where do people get the money to redeem their vehicles?  My office uses a company called 722 Redemption Funding (www.722redemption.com ) .  This company has its financing through U.S. Bank and will make redemption loans to people in bankruptcy.  It is true the interest rates are higher than a normal loan due to the risk, however they are good at providing a side by side comparison and for most, even with the higher interest rate, will pay less than what was originally owed on the vehicle.

Chapter 13 Bankruptcy

     A Chapter 13 bankruptcy is a personal restructuring of your debts.  In a Chapter 13 bankruptcy case you can also pay the value of your vehicle instead of the amount owed, however there are restrictions on this in Chapter 13.  Your car must have been purchased more than 910 days (2.5 years) prior to the filing of your bankruptcy case.  If your car was purchased more than 910 days ago, then we can “cram-down” the amount owed down to the value of the vehicle.  Further, we can adjust your interest rate to 5.00%  If you purchased your car within the last 910 days you can’t use the chapter 13 cram down tool but must pay the full amount owed.  However, even when the car was purchased within the last 910 days we can adjust the interest rate to 5.00% which will lower payments.

     Chapter 7 bankruptcy and Chapter 13 bankruptcy have many powerful tools that can be used in helping you prepare a plan to get back on your feet financially. Arizona bankruptcy attorney John Skiba offers a free consultation to discuss your specific situation and determine what the best path will be.  Mr. Skiba can be reached at (480) 464-1111 or via email at jskiba@jacksonwhitelaw.com .