Chapter 7 Bankruptcy

If you are an individual with financial problems, or a married couple with financial problems, or have a corporation or other business with financial problems, Chapter 7 bankruptcy may be the best choice to deal with those financial problems.  Individuals, including married couples, who file Chapter 7 to seek to discharge credit card debt, medical debt, unsecured loans, deficiencies owed on repossessed vehicles, and various other kinds of contract debt, and some kinds of tort debt (negligence, not intentional torts).  

Chapter 7 is the simplest, easiest kind (Chapter) of bankruptcy, and is the only kind (Chapter) of bankruptcy where debtors to NOT have to have the Bankruptcy Judge confirm a plan of repayment (which debtors must do in Chapter 13 bankruptcy and in Chapter 11 bankruptcy), and then spend 3 or more years making monthly Chapter 13 or 11 plan payments to repay debts. 

One of the most important things in a person’s Chapter 7 case is to have a competent attorney do your “claims of exemptions” (Schedule C) because in Chapter 7 the Chapter 7 Trustee has a right to sell any property which is not properly claimed exempt, to get money to pay your creditors.   Because she was a bankruptcy judge for 14 years, attorney March of the Bankruptcy Law Firm is extremely knowledgeable about what exemptions you can claim.  If you hire the Bankruptcy Law Firm to do your Chapter 7 bankruptcy case, attorney March will personally analyze your situation and do your claims of exemption (Schedule C), to use the exemptions available to you to the fullest extent the law allows.   

The property that you may be allowed to exempt includes a homestead exemption on a home you own and reside in, household furniture and furnishings, some jewelry, clothing, a certain amount on an automobile or other vehicle, and a “wild card” exemption if you do not claim a homestead exemption.  There are also detailed rules regarding pensions, IRAs and other retirement plans, which only a competent attorney will handle correctly in your bankruptcy case.   Corporations can file Chapter 7 to wind up their affairs if they can’t afford to keep operating, but are NOT eligible to receive a discharge of debt in Chapter 7.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a debt adjustment procedure for individuals only, including joint cases by husbands and wives. If you are behind (in arrears) on your mortgage payments on your home or other real property, you may be able to use Chapter 13 to keep the property from being sold in foreclosure, and be able to spread payments to pay off your mortgage arrearage over the whole life of your Chapter 13 plan of repayment, which can be 3 years, or even as long as 5 years. 

In addition, if you have debts for fraud, conversion, embezzlement, breach of fiduciary duty (those kinds of debts can be held to be “non dischargeable in Chapter 7 Bankruptcy) you can seek to discharge those kinds of debts in Chapter 13, if the Bankruptcy Judge confirms your proposed Chapter 13 plan of repayment, and you fully perform that repayment plan, in which you must make your “best efforts” to pay back a portion of those “problem” debts. 

To be eligible to file Chapter 13, you must be within certain specified debt limits, and have sufficient regular income to make monthly Chapter 13 plan payments for the life of your Chapter 13 plan.  Chapter 13 is complicated, and very few lawyers and law firms do a competent job handling Chapter 13 cases.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy cases are the big “reorganization” cases you see in the newspaper or hear about on TV news (Sears, K-Mart, United Airlines, Enron and a lot of other big companies have had Chapter 11 bankruptcies.  Chapter 11 bankruptcy is prohibitively expensive for individual debtors and small business debtors, and the Bankruptcy Law Firm tries to avoid using Chapter 11 bankruptcy for individuals and small businesses with debt problems, as Chapter 11 is usually NOT cost-effective for individuals or small businesses, and usually is NOT the best choice for individuals and small businesses.  The Bankruptcy Law Firm represents creditors in all aspects of Chapter 11 bankruptcy cases throughout California, as well as representing creditors in all aspects of Chapter 7 and Chapter 13 cases.