Written by Canterbury Law Group

Types Of Bankruptcy

If you are looking for information about the different types of bankruptcy, this post should help

Understanding Chapter 7 Bankruptcy

In Chapter 7 bankruptcy you will do the following:

  • Pay your secured debts or relinquish proeprty to be liquidized and the proceeds go to pay your secured debts.
  • Non-exempt proeprty is surrendered so as much of your debt can be satisfied as possible.
  • You keep possession of other exempt property and are released from the accrued obligations from the remaining debt that is dischargeable.

In Chapter 7 bankruptcy is a good option if you do not have the income or the assets to pay off at least part of your debts. A formula is used and if your income exceeds a certain level, you will need to file Chapter 13 Bankruptcy.

Learn more about Chapter 7 Bankruptcy

Understanding Chapter 13 Bankruptcy

In Chapter 13 Bankruptcy you will do one (or maybe a combination of) the following:

  • Rid yourself of multiple debts so payments can be managed.
  • Taking into account your income, restructure existing debt payments to make them more manageable for your personal circumstances.

The two most important considerations the judge and the Trustee will take into account when they make a decision to accept your proposed bankruptcy plan are:

  • Will each creditor receive at the very least as much revenue if you  had filed a Chapter 7 bankruptcy?
  • Whether all creditors are being treated with a degree of fairness?

In Chapter 13 bankruptcy, the goal is usually to get your creditors to agree with a plan of action. They may try to get their money faster or obtain more money from you. Creditors do not have to agree with your plan but it will influence the judge and Trustee more favorable if they will agree. Regardless of whether they agree or not, the judge may approve the plan so long as the judge determines the creditors are being treated equally and they will obtain at a minimum, the same amount as they would have been paid under Chapter 7 bankruptcy.

Learn more about Chapter 13 Bankruptcy

Deciding The Correct Type Of Bankruptcy

Ultimately your bankruptcy filing will come down to just two things, income and assets.

Your income may prevent you from going through Chapter 7 bankruptcy, not to mention the high risk of losing most of your assets in this form of bankruptcy – however, assets that can be protected in Chapter 13 bankruptcy.

Let’s look at some scenarios where Chapter 7 or Chapter 13 bankruptcy are the best options.

Chapter 7 Bankruptcy – An Unemployed Debtor With Few Assets

In a situation where the debtor has no current income aside from unemployment benefits and has a single car with a loan against it and does not own a home or any other property – Chapter 7 bankruptcy is by far the quickest and efficient means of eliminating debt. This case is so common it is frequently known as a “no asset bankruptcy.”

Chapter 7 Bankruptcy – An Unemployed Homeowner With An Upsidedown Mortgage

If you are a homeowner and the value of your property is now below the value of the loan on the property, Chapter 7 bankruptcy may still be the best option. As the lien will have greater value than the property, the homeowner has zero equity in the estate of the bankruptcy – the house is protected from the risks of liquidation.

Chapter 7 Or Chapter 13 Bankruptcy – An Unemployed Homeowner With Significant Equity

Chapter 7 bankruptcy may not be best for an unemployed homeowner who has large amounts of equity in their property. In chapter 7 bankruptcy, the homeowner may lose their home. But if they keep up the mortgage payments, the homeowner can maintain their home in a Chapter 13 bankruptcy. However, the petitioning household must demonstrate they have enough income to fund a debt payment plan.

Chapter 13 – Homeowners Confronting Foreclosure or Mortgage Delinquency

Chapter 13 bankruptcy gives homeowners who are behind on their mortgages a method of catching up mortgage payments that are past due and at the same time ridding themselves of part of their dischargeable debt. This way it is possible to ensure their home is safe from foreclosure and get rid of medical debt, 2nd or 3rd mortgages and credit card debt. There is not a way to make up mortgage arrears in Chapter 7 bankruptcy.

Chapter 11 – Wealthy Pensioners With A Large Accumulation of Debt

It is very often the case wealthy debtors have to file under Chapter 11 bankruptcy simply because there are limits to the income and debt levels in Chapter 13 and Chapter 7 bankruptcies.

Sources

  1. “Types of Bankruptcy.” Legalzoom.com, 30 Sept. 2015, www.legalzoom.com/knowledge/bankruptcy/topic/types-of-bankruptcy.
  2. Nolo. “Which Type of Bankruptcy Should You File? Chapter 7 vs. 13.” Www.alllaw.com, Nolo, 12 Mar. 2019, www.alllaw.com/articles/nolo/bankruptcy/which-type-chapter-7-chapter-13.html.

Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale

Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced professionals will work with you to obtain the best possible outcome. You can on the firm to represent you well so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business BankruptcyChapter 7 BankruptcyCreditor Representation, Chapter 5 ClaimsChapter 13 Bankruptcy, Business RestructuringChapter 11 Bankruptcy, and more.

*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.

Written by Canterbury Law Group

How Bankruptcies Work

Wondering how bankruptcy works? This post should help. The legal process known as bankruptcy is overseen at the federal level by United States bankruptcy courts. The purpose of bankruptcy is to help businesses and individuals reduce or eliminate a portion of or their debt enabling them to at least pay back some of the money they owe, and to reduce debt burdens to allow future growth.

Although bankruptcy may help you obtain some relief from your outstanding debts, it will have negative impacts in other areas of your life. For example, it will reduce your chances of successfully opening credit card accounts as well as getting favorable rates on loans, and your credit report will show your bankruptcy for seven to ten years.

The Basics Of Bankruptcy

Bankruptcy is not something you want to endure alone. A good bankruptcy attorney can make sure the process runs as directly as it can and will ensure compliance with all the applicable regulations.

Certain requirements have to be met before you can start bankruptcy filing. You will have to do the following:

  • Go through a complete credit counseling course using a credit counselor who is government approved – they will complete an assessment of your personal finances and discuss bankruptcy alternatives. They will also assist you in creating a personalized budget.
  • Decide whether to file Chapter 7 or Chapter 11 or 13 bankruptcy. Although all bankruptcies can assist in eliminating the debt that is unsecured, halt repossession or foreclosure, terminate garnishment of wages, debt collection actions and utility shutoffs – you will be expected to cover the court costs and attorney’s fees. It is important though to understand how Chapter 7 and Chapter 13 resolve debt issues.

How Chapter 7 Bankruptcy Works

Commonly known as “Straight bankruptcy” – a United States Trustee directly supervises the sale of any assets that are not exempt from the bankruptcy (basic house furnishings, cars, and work-related tools may be exemptions). Oversight by the Trustee is a mandatory procedure, and the proceeds from any asset sales go toward paying off your creditors. The balance of what you owe is then eliminated once the discharge of the bankruptcy has occurred. There are some debts Chapter 7 bankruptcy is unable to discharge at any time. Examples would include unpaid taxes, student loans, child support, and alimony also known as spousal maintenance. Consider the consequences of Chapter 7 bankruptcy. It is very likely you will lose most of the property you own, and a notice of the procedure will remain on your credit report for up to ten years following the filing date. Plus, you will not be able to file Chapter 7 bankruptcy for another eight years should you accumulate debts again.

Learn more about Chapter 7 Bankruptcy

How Chapter 13 Bankruptcy Works

In return for completely paying or paying a portion of your outstanding debt, Chapter 13 allows you to keep most of your property. A repayment plan of three to five years will be negotiated through your attorney and the bankruptcy court Trustee assigned to your case. When you have paid the money owing under the plan, the balance of the debt is discharged even if you have only repaid some of the money you originally owed. Chapter 13 bankruptcy will still hurt your credit but less so than Chapter 7. As you repay some, maybe all, of your outstanding debts, you will have some assets retained. Further, Chapter 13 bankruptcy will only show on your credit report for seven years, and if needed, you can refile Chapter 13 in just two years.  People within a Chapter 13 plan send just a single check to the U.S. Trustee each month, who then routes those monies proportionally to the various creditors owed.

Learn more about Chapter 13 Bankruptcy

Definitions of Common Bankruptcy Terms

  • Unsecured Debt: Credit cards are an excellent example of unsecured debt. Basically, the creditor does not hold any tangible assets or collateral to secure the debt.
  • Secured Debt: This is where the creditor holds tangible assets or collateral to secure the debt. An auto loan or mortgage on a home are two examples. If the loan defaults, the creditor can seize the vehicle or home.
  • Reaffirmed Account: This is when you make an agreement to continue the payment of a debt that may be discharged in Chapter 7 bankruptcy proceedings. The reaffirmation of the account and your agreement to pay the debt is usually done with the purpose of allowing the debtor to maintain a piece of collateral, a vehicle, for example – that may otherwise be seized as a standard part of the bankruptcy process.
  • Means Test: Under Chapter 7 Bankruptcy a means test is mandatory to demonstrate to the bankruptcy courts a debtor has no means to repay their debts. The means test assesses things like assets, income, unsecured debt and expenses. When a debtor fails the means test, the Chapter 7 bankruptcy may be dismissed, or they may choose to start proceedings for Chapter 13 bankruptcy.
  • Liquidation: When the non-exempt property of a debtor is sold – the proceeds are then paid to their creditors via the U.S. Trustee’s office.
  • Lien: A legal procedure where a creditor can take, hold and/or sell real estate previously belonging to the debtor as security for debt repayment.
  • Discharged Bankruptcy: Discharged refers to when the bankruptcy procedures have been completed and certain debts are literally extinguished forever.   In Chapter 7 bankruptcy this is once your assets have been sold and all of your creditors paid. With Chapter 13 bankruptcy it is completed when the repayment plan of the debtor has been completed, usually over a 3 to 5 year period.
  • Credit Counseling: it is mandatory to meet with a government-approved credit counselor before you can commence bankruptcy proceedings. You will also have to complete a course in personal finance management prior to the bankruptcy being successfully discharged.
  • Bankruptcy Trustee: A person (or in some cases a corporation) to act on behalf of the creditors. They are appointed by the bankruptcy court. In Chapter 7 Bankruptcy they will review the petition of the debtor, liquidate assets and be responsible for the distribution of those funds to the creditors. In filings for Chapter 13 bankruptcy, the Trustee will also oversee the repayment plan agreed by the court and the debtors’ attorney. They will also receive the monthly payments from the debtor and distribute the monies to the creditors.

Types of Unforgivable Debt

Bankruptcy potentially eliminates a great deal of debt; however, the following debt types cannot be removed in either Chapter 7 or Chapter 13 bankruptcy.

  • Reaffirmed Debt
  • Debt from student loans
  • Government taxes, penalties or fines
  • Child Support
  • Alimony
  • Court penalties or fines
  • Federal tax lien owed to the US Government

Bankruptcy Consequences

Loss of property is probably the consequence of bankruptcy most people are familiar with. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy require you to forgo assets and possessions so creditors can be repaid some of the money they are owed. Sometimes, bankruptcy may mean losing possessions, for example, jewelry, vehicles, antique furniture, and real estate. It may also hurt others if you had a co-signer on some of your debt. Bankruptcies take a toll on your credit and will cloud the way future lenders see you. They may decide not to offer you credit or burden you with higher interest rates if they do grant credit. A bankruptcy on a credit report undoubtedly causes harm to your credit score.

Obtaining A Loan Or Credit Card Following Bankruptcy

Once a bankruptcy is discharged, it will probably be very tough to get a loan or a credit card until the bankruptcy comes off your credit report. To start rebuilding your credit potential, you will need to make sure you succeed by paying all your bills regularly and on time. This may make lenders look more favorably; however, expect high rates of interest and terms that are less than favorable should you get approved.

Obtaining A Mortgage Following Bankruptcy

Many of the same problems with obtaining a credit card or loan will apply to a mortgage – plus you can expect to pay a far more significant down payment and interest rates. A good tactic is to reaffirm your home mortgage during bankruptcy proceedings. This will allow you to stay in your home and continue the payments on the mortgage you already have.

Alternatives To Bankruptcy

  • Use a debt consolidation loan: These loan types take higher interest loans and combine them into a single loan at a lower interest rate to help you manage your debt.
  • Credit Counseling: Credit counseling from a credit counselor who is government approved can help you with a feasible plan to repay what is owed to your creditors. They can also help with budgeting.
  • Approaching Creditors to Negotiate a Short Pay: See if your creditors are willing to negotiate a different payment plan. Creditors do not want to have to handle defaults so they may be willing to work with you so a repayment plan that will be successful can be arranged.

Final Thoughts On Debt Relief

Your credit will take a negative hit every time you do not pay a debt in the manner you originally agreed. Before you declare bankruptcy, you should research all of your options, obtain advice from a counselor who is qualified and has a thorough understanding of credit issues so you can understand the full impact your decisions will have to your financial status. Remember you can always make real headway by:

  • Utilizing credit in small amounts and paying the total balances when they are due.
  • Keeping an eye on your credit report for its accuracy.
  • The creation and keeping to a personalized budget.
  • Not taking on additional debt.

Source

Bankruptcy: How It Works, Types & Consequences.” Experian, 11 Jan. 2018, www.experian.com/blogs/ask-experian/credit-education/bankruptcy-how-it-works-types-and-consequences/

Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale

The Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced professionals will work with you to obtain the best possible outcome in your situation. You can trust us to represent you fully so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business Bankruptcy, Chapter 7 Bankruptcy, Creditor Representation, Chapter 5 Claims, Chapter 13 Bankruptcy, Business Restructuring, Chapter 11 Bankruptcy, and more.

*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.

Written by Canterbury Law Group

Debt’s Emotional and Mental Toll

Debt – it is a word that can quickly cause anxiety for many Americans. Credit card debt continues to rise, reaching up to $420 billion in 2018. The average household has almost $7,000 in balances carried over to the next month. Credit card debt comes with high-interest rates, which makes it even harder to pay off.

Debt plays a serious role in the a person’s emotional and mental well being. The more debt an individual accumulates, the more likely they’ll deal with stress and anxiety of having to pay it off. Too much debt can take over your life.

If debt becomes too overwhelming, bankruptcy tends to be the last option. There is bankruptcy help in Scottsdale, but that might add a whole new level of stress and anxiety. So, if you’re going through debt right now, consider how it is affecting you emotionally and mentally.

Anxiety and Depression

A study done by Dr. John Gathergood of the University of Nottingham found that those in debt were twice as likely to undergo mental health problems, anxiety and depression included. If this becomes an issue, feelings of worry and hopelessness could arise, making the situation that much more difficult to get a grasp on.

Embarrassment

Admitting that you’re in debt can be embarrassing for some, especially if they’re in so much debt that bankruptcy is a realistic option. In society, money tends to be linked to our success. If you have it, you must be successful in life. If you don’t have it, then you’re not as successful.

With this mentality, many struggling with debt will hide it and act like they are okay financially. The issue is that this could lead to even more debt. They may say yes to expenses that they shouldn’t be in their situation. Plus, they could be avoiding the much-needed help friends and family could offer.

Frustration and Anger

Debt is frustrating. For some, it can be so frustrating that it makes them angry, especially if the debt is out of their control. Anger may arise if the debt was a result of losing a job, an unexpected expense, identity theft, or a serious illness or accident. Frustration tends to come when the debt is from previous years that you wish you wouldn’t have done. Either way though, this mentality won’t help your situation.  You may need to seriously consider your bankruptcy options.

Fear

When you live in debt, fear tends to be a common emotion that many feel. It’s the fear of wondering if you’ll be able to make your payments, pay for your mortgage or rent, put food on the table, ensure there is hot water and electricity in your home, or falling into bankruptcy.

Debt brings up many worries and the deeper in you go, the more the fear becomes apparent. Other fears can arise like the fear of wondering what you’ll do next, how you’ll get out of it, what people will think of you, and if you’ll be able to survive your debt.

If you’re struggling with debt, it’s essential that you watch how it is affecting your emotional and mental well being. The stress of debt can quickly take over your life. However, if you can avoid that from happening, you’ll be able to tackle your debt with a clear mind.  Bankruptcy can often clear the decks of almost all debt and give you a fresh start in life, and with your life’s well being.

Written by Canterbury Law Group

Your 2019 Financial Resolutions to Get On Top of Your Debts

Making New Year’s resolutions can be challenging. Where do you start and what should it be about? Some popular resolutions revolve around finances – make more money, pay off the credit card, get out of debt, and another similar turn the corner ideas.

If you are struggling financially and worried about filing for bankruptcy, consider making a New Year’s resolution to help you take control of your debt.

Although when in doubt, there is your top bankruptcy attorney in Scottsdale, the lawyers do not always intend to file for bankruptcy for every client. Consider making some of the following financial resolutions to help you get on top of your debt.

Learn More About Finances

Make a New Year’s resolution to improve your financial literacy. The more you understand finances and how money, budgeting, investing, and debt work, the better off you can become.

The internet has tons of blogs that seek to help you take control of your finances. Browse through some that offer information to teach you about finances, rather than provide band-aid solutions to a single problem.

Start a Budget

If you are struggling with debt, you have likely heard the word budget from time to time. That is because a budget is one of the best ways to give you a snapshot of your actual financial situation. A budget shows you how much money you bring in each month and where you are spending it all each month.

To start a budget, write down your total monthly income after taxes. Then, begin to create expense categories. First, write out your fixed expenses (rent or mortgage, insurances, utility bills, and anything else that stays the same or similar each month), then move to your variable expenses (the ones that change month to month like entertainment or dining out). Be specific and honest with your categories.  Keep track of the spending on your phone or on a small notebook in your car.  Every dollar.

Increase Your Monthly Income

Another good resolution to help with debt is to aim at increasing your monthly income. It could be as little as $100 a month or up to $1,000. No matter what the number is though, make sure it’s realistic for you.

There are many side gigs you can do on top of your full-time job. You can get into some freelance work, teach students on the side (for example, guitar or piano lessons), or if you have a hobby in which you create things, you could start selling them.  You can drive for Uber or Lyft a few nights a week, for example.

Set Up a Savings or Emergency Account

Even though if you are in debt and you want to retire it quickly; it’s important that you have an emergency fund. That money is not there for whenever you want it. It’s there for when you absolutely need it.

Ask yourself if you could afford a $500 unexpected expense right now. Would you be okay, or would it push you even farther into debt? Either way, it’s in your best interest to start setting aside small amounts of money each month into an emergency account.

Target a Certain Debt

If you have multiple debts, one of your resolutions could be to target a particular debt. Instead of making the minimum payments on each debt every month, bump up the amount you pay for one debt that has the highest interest rate.

Take the debt with the highest interest rate and make that your primary target first. With the other debt, keep up with the minimum payments. Once you pay off the debt with the largest interest rate, that money can go towards the next debt, and so on. It will turn into a snowball effect until you have everything paid off.  It might take years to get there, but at least you will be on the path to paying everything off and avoiding bankruptcy.

Written by Canterbury Law Group

4 Steps to Take to Avoid Filing for Bankruptcy Again

Going through bankruptcy is a stressful time. Although the stigma around bankruptcy and how we view it is changing, it is still something that many people are ashamed of. For some, going bankrupt was the result of a job loss or medical crisis they could not afford to pay back. But for others, bankruptcy is the result of overspending. No matter the reason though, bankruptcy tends to be the last option for families or businesses.

Sometimes, even after filing for bankruptcy and going through all the qualifications to continue, there may come the point when a second bankruptcy case is looking like the only option. If this is the case, you likely wouldn’t want to go through the process all over again.

There is a lot of bankruptcy help in Scottsdale if you find yourself in that position. However, there are steps you can take before possibly pursuing a second bankruptcy claim that could help get your debt under control.

Speak With Your Creditors

Just as much as you do not want to file for bankruptcy, neither do your creditors. When you claim bankruptcy, the creditors do not get the same amount of money as they would if you were paying the debt. You may be able to use that to your advantage.

Speak with your creditors and anyone else you owe money to. See if they would be willing to negotiate a payment plan or giving you a few extra grace months until you can gather enough money.

Sell Assets

If you are filing for bankruptcy again, it’s because you don’t have enough money. One way to bring in quick cash is by selling assets. The more you can sell, the more cash you can bring in.

Go through your home and see what items you have that you no longer use or need. It could be clothing, jewelry, artifacts, even a car. Make a list of what you could sell and see if it’s something you can live without.

Take a Second Job

If you are really close to filing for bankruptcy, it may be time to look for another job. The more money you can bring in, the quicker you can pay off your debts to avoid bankruptcy. Although taking on another job is not the most popular step to take, it could bring in enough additional income that you could get straightened out with your creditors.

Ask for Help

If you have exhausted all other avenues and are not sure what else to do, it may be time to ask for some help. Many find this embarrassing the first time, and likely more embarrassing the second time. However, if you can negotiate a loan from a friend or family member, it could be exactly what you need to put the idea of bankruptcy out of your head.

In the end, there is no quick solution to avoid bankruptcy. You will need to find ways to increase your income and reduce your expenses to help get you back on your feet. Work with a budget to keep track of your finances, and to help prevent you from falling into this situation again in the future.

Written by Canterbury Law Group

Why You Should Not File for Bankruptcy

In some circumstances, filing for bankruptcy is the only solution to deal with your financial crisis. For others though, bankruptcy is actually a bad idea and should be avoided.

Each situation will be different, depending on how much debt you have and what kind of debt it is. It’s essential that you seriously think about the benefits and downfalls of bankruptcy, and see if it is the best solution for your current situation.

Your top bankruptcy attorney in Scottsdale is ready to help you with all of your bankruptcy needs. First, though, see if your reason for bankruptcy is a good one.

Cannot Pay Small, Unsecured Debt

Unsecured debt is commonly known as past due to credit cards. It’s debt that has no outstanding collateral for the credit card company to seize from you. That means the lender lets you spend as much as you want without tendering any security in case you default on the loan. If you do default on your payments, there is nothing for the lender to repossess.  While they certainly can sue you, that again only gets them a judgment.  Eventually, that judgment will likely lead to garnishment of your banking accounts and a paycheck.

This isn’t to say that you can stop paying small loans and you’ll be fine. There are still issues involving your credit and the chance of the lender suing you in court. However, this is not a good reason to claim bankruptcy. In many cases, you or your bankruptcy lawyer can negotiate with the lender to set up a payment plan that works for you, or to pay a lump sum to clear up the debt.

There are also occasions in which the lender may write off your debt as uncollectable, but that isn’t a solution to rely on.

Student Loans, Income Tax, Court Judgment, or Child Support

Bankruptcy doesn’t necessarily erase all of your loans. In some cases, bankruptcy won’t help you with certain loans. Depending on what you owe, each situation is treated individually.

Filing for bankruptcy for debt like student loans, income taxes owed, certain court fines or penalties and child support won’t do you any good. There may be extreme cases when bankruptcy can quash this kind of debt. For the most part, though, bankruptcy can’t do anything about these types of debt.

Stop Collection Agencies from Calling

If you are wary of collection agencies calling you all the time, there’s an easier way to make them stop than filing for bankruptcy. Through the Fair Debt Collection Practices Act (FDCPA), if you request them to stop calling, they must oblige under federal law.

Send a written letter to the collection agency stating you do not want them to contact you anymore. If they continue to call after your request, keep a record of the phone calls, you can sue the collections agency later and potentially collect damages and fees.

Want to Restart

If you’re looking at bankruptcy as an easy way out of your debt, you may want to reconsider that mindset. For starters, there will be certain debts as we mentioned that will never go away after filing for bankruptcy.

Filing for bankruptcy is also hard on your credit. Bankruptcy remains on your credit record for up to ten years. That means if you want to take out a loan for a new vehicle or a mortgage, you may have a hard time being approved for many years to come.

Written by Canterbury Law Group

My Workplace is Going Bankrupt – What Do I Do?

When a business goes bankrupt it, it isn’t the management and owner who tends to get hit the hardest. Instead, it is the on the ground workers who are more likely to feel the hit the hardest.

Higher paid employees like management who would know more about the bankruptcy likely have enough money saved up that they can get by. For entry-level employees and those not in management, however, chances are they won’t be as well off.

If you fall into this category and your business is going bankrupt, it can be a scary time. You are likely wondering what will happen to you. Will you still have a job? Are the bills going to pile up and will you have to file for bankruptcy yourself?

We want to provide you with the best bankruptcy help in Scottsdale. So, if your company is going bankrupt, as an employee, here is what you should know.

It depends on the Type of Bankruptcy

There are two types of bankruptcy claims that a business can go through. Depending on which one is being processed, will determine what happens to you as the employee.

If your company is filing for Chapter 11, the business is asking help from the courts to repay creditors and sell off assets. There is a chance you could get laid off as they go through cost-cutting measures. On the other side, the employer may retain all positions, but written employment contracts may be up for renegotiation that could not end well in your favor.

If your company is filing for Chapter 7 though, this is the liquidation of the entire business, meaning the company’s existence comes to an end. Most likely all employees will be out of a job after the end of the liquidation and the bankruptcy concludes.

Unpaid Wages Will Get Paid Out

If you get laid off due to the bankruptcy liquidation, any wages you’ve earned that has not been paid will be treated as a debt owed from the employer. There is a cap for wages, and salary earned up to 180 days before bankruptcy.

You cannot guarantee payment, however. In the Fair Labor Standards Act, unpaid wages are not covered. This means if there are not enough assets to pay for all of the unpaid wages, you may not receive anything at all.

You May Lose Your Pension

Most likely your employee pension plan will get terminated in the event of a liquidation. There was, though, the Pension Benefit Guaranty Corporation (PBGC) put in place to protect private sector workers. So, if your employer cannot pay your benefits, the PBGC will help out to fill the gap in pension assets. 

Vacation Pay

If you have accrued vacation days, they will fall into unpaid wages. This means you are likely to get compensated for them. However, once again, you cannot guarantee that you will receive your payout. The labor laws differ from state to state.

These are a few of the things to look out for if your company is filing for bankruptcy. If handled well, you could still be compensated for any unpaid wages, pensions, benefits, and vacation days after discharge. However, there is always the risk that you will receive nothing if the company cannot come up with enough money to pay their debts and your owed wages.

Written by Canterbury Law Group

4 Steps to Get Your Business on Track After Filing for Bankruptcy

Bankruptcy is a dreaded word by not just business owners, but families as well. It is not something that people want to go through, but it is the reality for many. With a business, sometimes you can put in all the hard work in the world but still end up filing for bankruptcy.

When starting a business, 30% will fail during the first two years. That number increases to 50% in the first five years, and 66% in the first 10 years. Only 25% will actually make it to at least 15 years.

With these stark statistics, there’s a likely chance that a new business may end up filing for bankruptcy. If that is the case, can your business survive, and if it does, can you get it back on track?

Getting the top bankruptcy attorneys in Scottsdale is one step to take. After that, consider some of the following points to help you get your business back on track.

Determine Which Type of Bankruptcy You’re Filing For

Depending on which bankruptcy you end up choosing to file, whether it be Chapter 7, Chapter 13, or Chapter 11, the case will significantly impact the outcome for your business.

For Chapter 7, your entire business is liquidated and sold off. You would then have to start over from scratch. In contrast, Chapter 13 bankruptcy will affect your company, but you will still have the debt to deal with. With Chapter 11 though, your business will continue to operate daily as your case pushes through the bankruptcy process and a reorganization plan is approved.

Understand What Went Wrong

One of the most important things to focus on after going through the bankruptcy process is to determine what went wrong. One of failure’s benefits is that it’s an opportunity to learn and grow. Take a look at your prior business plan and make essential notes of which parts went wrong that caused you to go into bankruptcy.

Build Your Credit Back Up

One of the hardest things about bankruptcy is that your credit score takes a significant hit. That number is essential if you need to file for a loan to start your business back up again.

Work towards building your credit back up. Start by paying all of your bills and credit cards on time. The more diligent you are about any remaining debt and paying it off, the more favorable outcome it will have on your credit score.

Find Another Source of Revenue

If your business can continue while you are going through bankruptcy, find additional ways to bring in more money. The reason you went into bankruptcy is that you lacked money. So, if you can find other ways to increase your monthly revenue, you’ll have more money to put towards your debt and to keep your business running.

Don’t look at bankruptcy as the end of an era. Instead, consider it as a second act— the new chance to get your company back up and running smoothly once more. It will take a lot of hard work and dedication, but a business can survive and thrive after filing for bankruptcy.

Written by Canterbury Law Group

Dealing With the Emotions of Bankruptcy

For many, accepting the fact that their finances are beyond their control and that bankruptcy is the only option is challenging. The thing is, though, bankruptcy should not be looked at as the end of the world.

Filing for bankruptcy is a way of admitting that you need help with your finances, and are willing to put in the work to regain control. However, the word bankruptcy still has a negative connotation to it. With that can come the stress on your mental and emotional well-being.

When going through bankruptcy, it is important that you remain as strong as you can. That is why we have the following six tips to help you deal with your emotions while going through bankruptcy.

Realize You Are Not the Only One

Filing for bankruptcy can be a blow to the ego. Your debt got out of hand to the point that there was nothing more you could do to control it. It can negatively affect your mental well being. The last thing you need, though, is for you to be hard on yourself which will only make you suffer even more.

Understand that you are not alone. Many people go through a bankruptcy claim, and many of them come out better after it’s all said and done. Look at a bankruptcy claim as a step you’ve taken to regain control of your finances, and not that you’ve given up. The truth is, you haven’t given up by taking this path because it’s only the first step of many that you’ll be taking to get out of debt.

Speak With Your Attorney

Your bankruptcy attorney is there to answer all of your questions and to guide you through the bankruptcy processes. By going with the top bankruptcy attorney in Scottsdale, they know how difficult a bankruptcy claim can be on someone’s mental well being. A good attorney will be compassionate and understanding, all while not allowing you to give up mentally and emotionally.

Lean on Family and Friends

Even if you want to keep your bankruptcy claim very private, it is still beneficial to have someone you trust to lean on. A close friend or family member will be able to listen to your problems and give you a shoulder to cry on. Take advantage of this as to avoid bottling everything inside.

Educate Yourself on Finances

After filing for bankruptcy, it’s a good idea to start reading up on what you can about finances and recovering from bankruptcy. Financial education will help you through your bankruptcy journey, as well as prevent you from ending up where you were before all of this. 

Seek Counseling

If you find that bankruptcy has taken an extreme toll on your mental health, seeking out counseling services is a good idea. These trained professionals can listen to your problems, and give you advice and coping mechanisms that will help you make it through bankruptcy.

Volunteer

For some, keeping their mind busy will help clear their head and stop thinking about bankruptcy for a moment. Going out and volunteering is an excellent way to do this. Volunteering is a way to lift your spirits by doing something good for someone else.

Written by Canterbury Law Group

Moving Forward After Filing for Bankruptcy

Filing for bankruptcy is not something families want to do. Unfortunately, though, it is something many American’s have to do.

Filing for bankruptcy is not the end of the world. In reality, it is actually the opposite for many people. It can be looked at as a fresh start with finances, and a way to plan your path to financial freedom. However, it isn’t as easy as it sounds. After filing for bankruptcy, it takes a lot of time and dedication to continue moving forward. Bankruptcy is not a quick fix and is a decision that must be taken seriously.

For some, when the possibility of bankruptcy is an option, the question of how to move forward afterward will come up. With our bankruptcy help in Scottsdale, and along with some of the following tips, we will help you move on with your life after claiming bankruptcy.

Keep Paying Any Reaffirmed Debts

Some debts can survive bankruptcy, which means you will still have to pay them down. There are loans which are entitled to the value of the collateral. This means you will still be required to make the payments agreed upon in the original loan documents.

It would help if you didn’t look at these reaffirmed debts at as something negative. As long as you continue to make your payments on time, the reaffirmed debts can help you rebuild your future credit score.

Use a Secured Credit Card

Continuing with life without a credit card can be challenging. Many companies require a credit card before making a reservation, renting something, or even trying to purchase an item.

Using a credit card is what also helps build and improve your credit rating. A good credit score will allow you to apply for loans and mortgages, whereas a negative credit score is likely to get you denied. However, if you have a poor credit score or went through the bankruptcy process, it could be difficult to obtain one.

A secured credit card is something you should consider using after going through bankruptcy. These credit cards a basically pre-paid cards. You must deposit money into the card account before making any purchases with the card. The money is used as collateral; therefore you can only spend up to what you deposited. You can, though, deposit more to increase your credit, or even be rewarded an increased credit line from the bank.

Avoid Building Debt

One of the best things to do after applying for bankruptcy is avoiding what got you there in the first place. Try not to accumulate any new debt. Keep paying all of your bills on time. Create a budget to help you keep your spending in check, as to not spend more than what you’re earning. The more you can do to keep your cash flow higher than your expenses, the better chance you have of avoiding any more debt.

Don’t let bankruptcy be the end of your finances and your life. Although it will require work on your part, you should think of it as a fresh start to help you get your finances under control. By committing to it, you’ll be able to repair your credit score, pay off all of your loans, and work your way towards financial freedom.

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