The Law Offices of Phillippe and Associates: Your Brownsville Bankruptcy Attorneys
Between rent, food, medical insurance, education, car loans, and unexpected expenses, it’s understandable that many people find themselves struggling under debt beyond what they can afford to pay back. Businesses, too, are facing a particularly tough time as a result of the COVID-19 pandemic, and it’s important that the government provides opportunities for relief.
One such tool that is actually enshrined in the U.S. Constitution is bankruptcy.
If you or your business are facing debts or monthly payments that you can’t afford, the Brownsville bankruptcy attorneys at the Law Offices of Phillippe and Associates can help you.
Your Bankruptcy Options
Chapter 7 — Liquidation
Chapter 7 bankruptcy is a tool available to Americans who aren’t able to afford monthly payments on their debts. During a Chapter 7 filing, a bankruptcy trustee is appointed by the court to liquidate the filer’s assets. The value of those liquidated assets then goes towards paying off as much of your debts as possible.
Chapter 7 allows filers to remove all dischargeable debts and is the most common form of bankruptcy filing. It’s also worth noting that Chapter 7 can be used by businesses wishing to terminate their enterprises.
Chapter 11 — Reorganization
Chapter 11 bankruptcy is a process through which businesses, usually incorporated, can reorganize their debts. This filing can also be used by individuals whose debts are beyond the limit for Chapter 13.
The filing entails reorganizing your business’ debts and creating a repayment plan. If a debtor fails to carry out the terms of their Chapter 11 filing, it could result in their business being liquidated under Chapter 7.
Chapter 13 — Reorganization for Individuals
Chapter 13 bankruptcy is a type of filing that can be used by sole proprietors, the self-employed, and wage earners in order to pay off their debts without liquidating all of their assets. In order to file Chapter 13, debtors must make a steady income and be up to date on their taxes for the last four years. Chapter 13 requires filers to create a 3-to-5-year repayment plan in order to pay off as much of their debt as possible. To qualify, your unsecured debts can’t exceed $394,725, and your secured debts can’t exceed $1,184,200.
The bankruptcy process is complex. Each filer’s finances are unique, and the process has to have a route for each eligible filer. With that in mind, it’s worth exploring some bankruptcy basics if you think the process might help you.
1. Means Testing
Generally, means tests are methods by which a person’s eligibility for certain services or goods is determined. Regarding bankruptcy, the means test is used to determine the type of bankruptcy for which you qualify. Depending on how many people are in your household, you may qualify for Chapter 7 bankruptcy in Texas if your income is below $83,960 with the max for a single-person household of $50,144. If your income exceeds this amount, you may be able to qualify based on your projected disposable income.
If you fail to meet the means test for Chapter 7, you may wish to pursue a Chapter 13 filing. If you’re not sure which type of filing will work in your situation, we recommend seeking the advice of a Brownsville bankruptcy lawyer.
2. Credit Counseling
There are certain requirements you must meet in order to file bankruptcy, and one of those requirements is credit counseling. Before you can file, you’re required to attend court-approved credit counseling. The price for credit counseling generally ranges from $20 to $30 and can often be attended virtually.
3. Creditor’s Meeting
Roughly 30 to 45 days after your bankruptcy filing, you will attend a creditor’s meeting as a part of the bankruptcy process. This meeting involves the trustee assigned to your case who will review your documents for any fraud, exemptions, or irregularities. Creditors are allowed to attend the meeting and ask questions if they so choose. This meeting and the process that follows varies slightly depending on the type of bankruptcy you’re filing.
4. Personal Liability
Understandably, your biggest concern before filing business bankruptcy is probably how you personally are going to be held liable for the debts involved. This liability varies depending on the type of business.
Bankruptcy involving sole proprietorships, businesses of only one person, is likely to affect your personal credit.
- General partnership bankruptcy places liability for debts on both partners.
- The liability for debts in limited partnership bankruptcy falls on the general partner when the limited partner is not.
- Members of limited liability partnerships (LLPs) are generally, but not always, shielded from personal liability for debts.
- Shareholders of bankrupt corporations hold no liability for the corporation’s debts.
The bankruptcy of a limited liability company (LLC) places no personal liability for debts on the members of that LLC unless they personally guaranteed the debt.
5. The Small Business Reorganization Act of 2019
The Small Business Reorganization Act of 2019 created a subchapter of Chapter 11 bankruptcy that is specifically meant to help small businesses with less than $2,725,625 in debt. The process has been streamlined in order to remove additional costs and hurdles for filers. As a result, it is now much easier for small businesses to file bankruptcy. This act also places new discharge limitations in some cases after all payments have been completed.
Choosing Your Bankruptcy Lawyer
Bankruptcy filings can have a massive impact on both your personal and professional finances. This makes it incredibly important that business bankruptcy filers choose the right lawyers to handle their petition. When choosing a lawyer for your situation, you may wish to take the following factors into account:
- Make sure you understand your financial situation and goals as much as possible. Not only will this help you better understand your predicament, but you will also be able to make a better assessment of the type of attorney you need.
- Avoid firms that advertise their process as being “fast” or capable of being completed within a few days. These are red flags that your situation will not be given the proper attention it deserves. In fact, bankruptcy mills can put you in a worse position.
- Use referrals, legal directories, and bar associations to find the attorney for your needs. Spending a little extra time searching for the right firm can make all the difference.
- Make sure to ask plenty of questions regarding the potential attorney’s experience, credentials, and business insights.
- Understand the attorney’s method of communication. You’ll want to find the right balance that meets your needs, whether you prefer in-person meetings or are okay with digital communication (e.g. emails and digital forms).
The Evaluation Process
In order to fully understand your financial situation, our bankruptcy attorneys will evaluate your claim prior to your filing. Each evaluation process is unique, but in general, the process follows a similar track. During an initial consultation, we will obtain the necessary financial information, including checklists and other forms. This is also when we will discuss the pricing of our services.
After you have fully disclosed your assets and debts and provided your tax returns, we can help you decide which options are best for you. We will file a petition with the court and attend your creditor’s meeting 30 to 45 days later. During that meeting, your creditors have the opportunity to investigate your filing, and our bankruptcy lawyers will be there to advise you.
The Law Offices of Phillippe and Associates: Dedicated to Your Financial Freedom
Bankruptcy is a serious decision that shouldn’t be taken lightly. This process can have a long-lasting impact on both your business and your personal finances. It’s important that you are confident both in the choice to file and the specifics of your bankruptcy petition.
If you think that bankruptcy could help you achieve financial freedom, we recommend seeking the assistance of a bankruptcy attorney who can ensure that your filing goes as smoothly as possible. To learn more about how we can help you through the bankruptcy process, contact the Brownsville bankruptcy attorneys at the Law Offices of Phillippe and Associates today.