What is Bankruptcy?
Bankruptcy is the process in which a person legally declares they are unable to pay outstanding debts. Filing for Bankruptcy does not necessarily indicate failure or mismanagement of money. Debt problems can arise from situations over which a person has little or no control, such as a divorce, the death of a spouse, the loss of a job, a reduction in income, business failures, etc.
The Bankruptcy Code allows for various protections for people and businesses with the same goal in mind—the organized repayment (through either Chapter 13, 12, or 11) of some or all debts when repayment is an option or a fresh start discharge in Chapter 7 when there is no means of paying off debt. In all cases, property such as homes and vehicles can be protected.
A business may also declare Bankruptcy, under the terms of which they will either liquidate their assets and close, or they will restructure and continue to operate as they offer payments to creditors.
How do I file for Bankruptcy?
To file for Bankruptcy, a debtor, whether an individual or business, will have to gather documents to help in the creation of Bankruptcy schedules and states. Some of these documents will be provided to certain entities, such as the United States Trustee, the trustee for the type of case you file, and sometimes the court. Such documents may include monthly debt statements, dunning letters, letters from debt collectors and debt buyers, tax returns or transcripts, and W-2s.
An experienced Bankruptcy attorney at our firm can provide you with a list of documents needed to complete your schedules. With these documents and through meetings with you, your attorney can create the necessary schedules, statements, and, when appropriate, plans of reorganization. This will provide you, your creditors, and the court with the best possible understanding of your exact financial situation.
Will I need to attend credit counseling?
Yes, as a potential Bankruptcy filer, you must also receive mandatory credit counseling from a court-approved provider within 180 days before filing your case with the court. Counseling can be conducted by email or phone in individual cases.
Who is qualified to file for Chapter 7 Bankruptcy?
Only those who pass the “means test” are qualified to file for Chapter 7 Bankruptcy. The means test varies from state to state, as it evaluates whether your disposable income is above or below the median income for your specific state. The means test also takes into account your income and expenses, secured and unsecured debts, and various financial records, among other items.
Will all my debts be eliminated if I file for Chapter 7?
No; while Chapter 7 Bankruptcy allows you to discharge most debts, it does not liquidate all of them. You will be able to eliminate unsecured credit card debts, medical bills, past-due rent, past-due utility bills, and delinquent taxes that are more than three years old. However, you will still be responsible for student loans, past-due child support, past-due spousal support/alimony, taxes incurred within the last three years, and court-imposed fines and judgments.
If you have more questions about Chapter 7 Bankruptcy, visit our Chapter 7 FAQ page.
Will I have to close my business if I file for Bankruptcy?
Not necessarily. Chapter 11 allows you to keep your business open while you work on repaying your debts. With this type of Bankruptcy, you can negotiate a repayment plan and schedule with your creditors. As long as you continue making payments to satisfy your debts according to the repayment plan/schedule, you will be able to continue operating your business as normal. This option may even allow you to restructure debts to reduce the amounts due.
For more information and answers specific to Chapter 11, please visit our Chapter 11 Bankruptcy FAQs page.
Do I need a lawyer to file for Bankruptcy?
You are not required by law to hire an attorney to file for Bankruptcy. However, filing for Bankruptcy on your own is not advised. Regardless of the type of Bankruptcy, the filing process is incredibly complex. It is absolutely critical that you do not make any mistakes that could ultimately jeopardize the outcome.
When you work with an attorney, you protect your best interests. At Caddell Reynolds Law Firm, our experienced Arkansas Bankruptcy lawyers can answer your questions, keep you updated throughout the process, and provide the aggressive representation you need. We fight back against unlawful and unjust creditor practices and fight to ensure that our clients’ rights are protected.
How can Caddell Reynolds Law Firm help?
With over a century of combined legal experience and multiple office locations throughout Arkansas, we are well-poised to guide you through the Bankruptcy process. Our attorneys have successfully helped countless clients navigate tough, challenging situations, from stopping foreclosure to keeping their businesses—and their livelihoods—intact. We can help you throughout the entire process, from determining which type of Bankruptcy is ideal for your unique situation to gathering and submitting important documents to putting an end to creditor harassment.
We are available to answer any questions you may have at any time during the process. As a client of our firm, you will receive consistent and direct communication, as well as updates on your case and 24/7 accessibility to your legal team. Our goal is to not only help you navigate this difficult time in your life but also to help you achieve a positive outcome and continue forward with greater financial security and the tools you need to succeed.