Bankruptcy

The U. S. Bankruptcy Code is designed to provide a legal avenue in helping individuals and businesses pay off debts and regain financial stability when facing insolvency.

At Rose and Huey, PLLC, located in Phoenix, our multi-faceted practice extends to bankruptcy law. Our attorneys have extensive experience assisting families and their businesses in serious financial distress. The legal services our firm provides include a review of finances, with a thorough evaluation of income, assets and debt, in order to recommend the most effective legal approach to resolve your debt situation. When filing for bankruptcy is the only workable solution, our attorneys provide legal advice and representation for Chapter 7 and Chapter 11 and Chapter 13 bankruptcies.

Bankruptcy Law Changed in 2005

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, procedures for filing bankruptcy changed. Filing for bankruptcy now involves more stringent documentation as well as there being more restrictive qualification requirements.

Before 2005 bankruptcy law changed, anyone could file for Chapter 7, the most common form of bankruptcy for individuals. Under the new code, the qualifying factor in whether you can file or not is determined by your income; you must pass a Means Test. In order to file for a Chapter 7, your income may not be higher than the median income for your state, and in addition,  you are given 180 days to undergo bankruptcy credit counseling with counselors who are approved by the U.S. Trustee’s office.

Chapter 7

A Chapter 7 bankruptcy is often referred to as a liquidation. Assets are liquidated and proceeds go to your creditors. Typically this form of bankruptcy is chosen when there are few assets and credit card debt and other unsecured bills are involved. While a filing Chapter 7 bankruptcy will eliminate all debts in many case, there are certain debts that you will still have to pay such as child support, alimony, IRS debt, student loans from the government, unless you can establish undue hardship; fines and penalties for law violations, debts for personal injury or death caused by driving while intoxicated and any debts not listed at the time you filed for bankruptcy.

Chapter 11 bankruptcy and Chapter 13 bankruptcy are described as rehabilitation and allow you to establish a payment plan over time to pay off debt based on potential future income.

Chapter 11

The primary feature of Chapter 11 is its provision for reorganization. Corporations and partnerships in critical financial shape generally seek Chapter 11 protection. Sole proprietorships, however, may also be eligible for Chapter 11 relief.

Under Chapter 11, the debtor usually proposes a plan of reorganization to stay in business, while a bankruptcy court oversees the reorganization of the company's contractual and debt obligations. The court may grant complete or partial relief from most of the company's debts and its contracts, allowing the company to start anew.
Whether you are considering voluntary filing of a petition for a Chapter 11 bankruptcy or if your creditors are forcing your business to seek reorganization under Chapter 11, you will be dealing with a complicated process with stringent requirements. The expertise of a qualified bankruptcy attorney is vital to guide you through the legal complexities of the legal process and to protect the interests of your business and its stockholders.

Chapter 13

In a Chapter 13 bankruptcy, the debtor works out a payment plan to repay money owed over a period of 3-5 years. This type of bankruptcy is filed when there is regular income and is often filed to prevent foreclosure on a house. For example, if you were overdue on your mortgage payment, a Chapter 13 filing would allow you to make payments over time to pay money owed on the mortgage. Whenever a debtor has substantial equity in a home and has significant assets, filing a Chapter 13 and establishing a plan to repay your debt will allow you to retain assets. And, if you owe money to the IRS, which is a debt that will not be wiped out by filing bankruptcy, a Chapter 13 may work to your advantage over a Chapter 7.

For trusted legal advice and guidance or when you are contemplating bankruptcy, call the Arizona law firm of Rose and Huey, PLLC at (602) 340-8400. We will be happy to arrange a consultation to evaluate your situation and recommend a course of action.