Bankruptcy

Broadly speaking, there are two primary types of bankruptcies that our firm handles: Chapter 7 which is often referred to as a “Fresh Start” bankruptcy and the “Reorganization Bankruptcies” (Chapter 9, 11, 12 and 13) which provide debtors with an opportunity to make payments over a period of time. Chapter 9 is for municipalities like the City of Central Falls. Chapter 11 Bankruptcy is traditionally for businesses or business owners. Chapter 12 is for the family fisherman or farmer. Chapter 13 is traditionally for individual consumers.

Bouchard Baker, PC is well qualified to meet your needs in the Massachusetts and Rhode Island. Our experienced team handles matters including the following:

Chapter 7

While filing involves passing a means test to determine if you qualify, the goal of Chapter 7 is to help you:

  • Prevent foreclosure on a home
  • Discharge debt from personal loans and credit cards
  • Avoid deficiency debts
  • Relieve business debts
  • Stop creditor harassment
  • Prevent wage garnishment
  • Resolve possible lawsuits

Unlike a Chapter 13, bankruptcy filing, filing for bankruptcy under Chapter 7 is a simple and faster way to resolve your financial difficulties by having a trustee take possession of your assets, protecting exempt assets and liquidating non-exempt ones. Our bankruptcy attorney provides guidance in finding out how to qualify and properly file all forms to resolve matters in as little as 90 to 120 days.

Chapter 11

Chapter 11 is the most common bankruptcy for corporations and individuals with high income or very high debt who want to reorganize their debts. It is particularly popular for Corporations and Limited Liability Companies that own commercial real estate property and need to restructure. In a Chapter 11, a Plan of Reorganization is proposed to the court. Under the Plan of Reorganization, a repayment program is proposed which may include the writing-off of certain types of debt. In addition to a Plan of Reorganization, a Disclosure Statement is prepared. A Disclosure Statement is much like a prospectus. Its purpose is to describe how the Plan of Reorganization will be feasible, and to provide information for a creditor to make an informed decision of whether to vote for the Plan. Generally, the debtor continues to operate the business or property during the pendency of a Chapter 11. However, there are situations when the debtor may lose control of its business or assets in a Chapter 11 to a trustee. The loss of control usually occurs when there have been financial irregularities in the past, financial irregularities in the case itself, or a failure of the debtor to following the court’s rules.

Generally, if you are looking for a reorganization bankruptcy and qualify for a Chapter 13, it is preferred over a Chapter 11 given that the cost of hiring a Bankruptcy Attorney to prepare a Chapter 13 is considerably cheaper, the reporting requirements much less, and the requirements to have a Plan of Reorganization approved are easier. However, if your debts are particularly high, you are not an individual (e.g. a Corporation), or you need more flexibility than generally provided in a Chapter 13, Chapter 11 may be the better alternative.

Chapter 13

Chapter 13 is traditionally the most beneficial for those wanting to reorganize their debts. Chapter 13 bankruptcies are particularly popular for individuals who have become delinquent on their home loans and need time to get caught up. It is also a good choice for those individuals who may not qualify for a Chapter 7 bankruptcy for income or other reasons.

In a Chapter 13, our Bankruptcy Attorneys prepare a Plan of Reorganization to be proposed to the court. Under bankruptcy law, if the Plan of Reorganization meets certain criteria, it is approved by the court even over objections of creditors. In other words, a Chapter 13 Bankruptcy Plan is a way to force uncooperative lenders or debt collectors into working with you.

The formulation of a Plan of Reorganization is rather complicated, but generally speaking, you are required to pay your disposable income to the Trustee for typically three to five years. The trustee, after taking his/her fee of approximately 10% of the payments, uses the money you paid to pay your creditors as set forth in your plan. Typically, at the end of the Plan of Reorganization, your secured loans are caught up, and with limited exceptions, the unsecured creditors are either paid in full or their balances are discharged. The biggest difference between a Chapter 13 and a Chapter 7 is that in a Chapter 13 you make monthly payments to the trustee. In a Chapter 7, you do not make monthly payments to the trustee.

A Chapter 13 is typically more advantageous than a Chapter 7 if you are behind on secured loans and need time to get up. Likewise, as Bankruptcy Attorneys, in a Chapter 13 bankruptcy we can sometimes strip certain deeds of trust from your residence if you owe more on a first deed of trust/mortgage than your home is worth. This option of removing a junior deed of trust and/or mortgage does not currently exist in a Chapter 7. In the current housing market, this is one of the greatest benefits of a Chapter 13.

Besides providing a plan to catch up on delinquent secured payments and remove junior deeds of trust, a Chapter 13 is also often filed in cases in which individuals make too much money to qualify for a Chapter 7.

More expansive than Chapter 7 liquidation, restructuring debt under Chapter 13 involves a court-approved repayment plan allowing for consolidation of debt payments for a period of two to four years. Often called the wage earner plan, this form of bankruptcy requires a consistent source of income, and creditors are only allowed to collect the amounts in the plan.

Bouchard Baker, PC will help you determine a reasonable repayment plan and understand how to budget your resources to successfully complete the plan. With our help clients can take advantage of Chapter 13 benefits:

  • Protection from the creditor collection
  • Keep a home and personal property
  • Repay debts with reduced payments
  • Discharge debts not allowed under other bankruptcy methods
  • Eliminate secured interest on junior liens of real property
  • Make tax repayments easier by eliminating interest payments
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