Practice Area Descriptions

Bankruptcy

Bankruptcy is a legal process, governed by federal rules and procedures, set out in the United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. These statutes and procedural rules have been established to provide a means by which the debtor, the person who owes money, goods or services, who has become overwhelmed by his or her financial obligations, can have a fresh start. The bankruptcy process provides a means for debts to be repaid, restructured or discharged, in a manner that treats creditors, the persons to whom money, goods or services are owed, fairly and equitably.

There are a number of different types of Bankruptcy cases:

• Chapter 7 - Liquidation;
• Chapter 11 - Business Reorganization;
• Chapter 12 - Family Farmer Reorganization;
• and Chapter 13 - Reorganization for Individual with Regular Income.

A Chapter 7 liquidation case is often referred to as a straight bankruptcy. In this type of case, which represents the majority of the cases our firm currently handles, a trustee is appointed to collect the non-exempt assets of the debtor, liquidate the assets and distribute the proceeds to creditors according to a statutory order of priority. Non-exempt assets are those assets which the debtor cannot protect from being used to satisfy the claims of creditors; however, many assets can be protected by taking advantage of various statutory exemptions, such as the homestead exemption and exemptions for household furnishings, vehicles, and tools of trade, up to set amounts, as well as qualified pension plans and personal injury settlements or awards. A debtor may also keep property that is subject to the lien of a secured creditor, by reaffirming the obligation and agreeing to remain obligated after the discharge of his or her other debts in bankruptcy.

A Chapter 13 reorganization is another type of bankruptcy proceeding which is available to individual debtors under certain circumstances, in which the debtor pays a portion of the debts owed to unsecured creditors out of future income, rather than assets, according to a plan approved by the court, over a period of three to five years.

If you think you have a Bankruptcy law case, contact Kevin L. Pearson at KLP@cranwellmoorelaw.com or call (540) 344-1000 or toll-free 1-877-632-3352.