Consumer and Business Bankruptcy

Bankruptcy: We are a Debt Relief Agency.  We assist people file for bankruptcy relief under the United States Bankruptcy Code.

Bryant Legal, LLC serves clients in Columbus and Toledo, including the surrounding areas, who find themselves facing financial hardship and need the protection of the Court, as allowed by bankruptcy law, to obtain financial relief to reorganize or adjust their debts and obtain a financial fresh start.

There are three different bankruptcy chapters under the Bankruptcy Code that may work for you.  Selecting the right option depends on your financial situation, the amount and type of debt you are facing, and what your ultimate goals are for your financial future. Whichever chapter you choose to file under, the day you file your petition, all actions by all of your creditors must stop.

Chapter 7: For Individual Consumers

Chapter 7 bankruptcy, also known as straight bankruptcy, is a way for individual debtors to make a fresh start by obtaining a discharge of their debt and starting over with a clean slate.  For most consumers who qualify, Chapter 7 bankruptcy provides fast and complete debt relief.  Individuals who are not eligible for Chapter 7, or who have certain particular circumstances, may benefit instead from a Chapter 13 bankruptcy, or in some cases Chapter 11 bankruptcy.

Chapter 7 Eligibility:

A person does not have to be completely broke or insolvent before filing for bankruptcy. Presuming there are no other eligibility restrictions, Chapter 7 bankruptcy eligibility is largely determined based on the Means Test.  The Means Test was introduced with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and is designed to prevent individuals with primarily consumer debts (i.e., it doesn’t apply to individuals with primarily business debts) who have sufficient income from discharging a large portion of their debt.

Basically, if your income is below the median income for your household size, then you qualify and do not need to complete the entire Means Test form.  If your income is above median income, then you must complete the entire form to determine your Chapter 7 bankruptcy eligibility and whether a presumption of abuse arises.

  1. Exempt and Nonexempt Assets:
    • Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy because debtors are required to surrender their “non-exempt” assets to a chapter 7 bankruptcy trustee so that they may be liquated for the benefit of their creditors.  While this is true, there are numerous exemptions available to debtors which allow them to protect their assets and in most cases with the proper exemption planning, proceed as a “no asset” bankruptcy, meaning there is no turn over to a trustee and the debtor retains all of their assets. For example, Ohio’s exemptions currently allow debtors to exempt all of the following: Up to $132,900 of equity in a residence Up to $12,250 of equity in clothing, furniture, appliances and other household goods Up to $3,675 of equity in a motor vehicle Up to $2,325 of equity in tools used for work Up to $1,550 of equity in jewelry IRAs, pensions, 401(k)s, unemployment and workers’ compensation benefits. There are more exemptions available.  Married couples can usually double these exemption amounts.
  2. Dischargeable and Nondischargeable:
    • Not all debts are dischargeable in a Chapter 7 bankruptcy. For instance, obligations incurred in connection with a separation agreement or divorce decree are not dischargeable in a Chapter 7 bankruptcy. Student loans are also almost always nondischargeable. Additionally, if a debt is secured by real or personal property and the debtor wants to discharge the underlying debt, they can in most cases, but discharging the debt will not automatically extinguish the lien, and the debtor may still lose the collateral to the secured creditor.
      • Chapter 7 bankruptcy is best suited for debtors with large amounts of non-priority, unsecured debt, such as medical bills and credit card debt.
      • Certain tax debts are also dischargeable in a Chapter 7 bankruptcy, while others are not.

Chapter 13: For Individual Consumers

Chapter 13 bankruptcy, also known as a “debt adjustment” or “wage earner’s” plan, is an excellent way to help consumers, particularly homeowners, consolidate and reduce their debts and get the creditors and bill collectors off their backs.  It is for those who have fallen behind in payment of their debts, but if given some time, they have enough income to essentially catch up.  They file a reorganization plan with the court showing how they plan to repay debt over a three to five-year period of time.  Debtors must show they have enough income to meet their daily living expenses as well as the amount they intend to pay on back debts. If the plan is approved and they meet all their obligations under the plan, at the end of the payment period, remaining debts are discharged. During the course of the plan, they make one payment to the bankruptcy trustee who parcels out the right amount to the trustees.

Chapter 13 bankruptcy gives debtors the breathing room to step back from oppressive debt and create a plan that enables them to comfortably pay off their debts over a three to five-year period.  Among other benefits, here is a non-exhaustive list:

  • Debts can also be adjusted, reduced and discharged as part of the plan. While creditors have a right to participate in the development of the plan and file objections, once a plan is approved, creditors must abide by the terms of the plan.
  • Chapter 13 bankruptcy has the advantage of putting a stop to creditor harassment and bringing all creditors together in one place and subject to one payment plan. This method can be preferable to debt settlement, which requires the debtor to negotiate with each creditor individually in hopes of bringing the total monthly debt load down to a manageable level.
  • Another advantage of Chapter 13 is that it is easier to qualify for than a Chapter 7 bankruptcy, and many consumers who are ineligible for Chapter 7 may still find relief through a Chapter 13 bankruptcy.
  • Also in a Chapter 13 bankruptcy, there is generally no requirement to sell any property. Debtors who have nonexempt assets or secured property that they are afraid of losing in a Chapter 7 should consider filing a Chapter 13 bankruptcy.
  • Chapter 13 can also protect friends and family members who have co-signed a loan from creditor collection efforts through the co-debtor stay.
  • Chapter 13 can also help to prevent the loss of a family home through foreclosure.

Chapter 11: For Business Owners

Chapter 11 bankruptcy is a type of bankruptcy usually used by business entities, such as corporations, partnerships and limited liability companies, that permits a business to continue with operations while it repays creditors under a “reorganization plan.”  It is often a complex, and complicated process with which experienced bankruptcy attorneys can help.

  1. Chapter 11 Reorganization:
    • Occasionally, an individual debtor uses Chapter 11 bankruptcy, usually when the debtor is a very high-income earner with debts that total more than the maximum allowed for a Chapter 13 bankruptcy.
    • For those business entities that want to reorganize, Chapter 11 bankruptcy is really the only bankruptcy that can help them as a business is not entitled to a discharge of their debts in a Chapter 7 bankruptcy and cannot be a debtor in a Chapter 13 bankruptcy.
    • However, Chapter 11 bankruptcy for businesses can be very expensive and complex and is often not economically feasible for most small businesses.
  2. Small Business Reorganizations:
    • The bankruptcy law provides special provisions for small business entities filing for bankruptcy under Chapter 11, which are designed to speed up the bankruptcy proceedings and reduce legal and restructuring expenses. Small business debtor status is defined as a person or entity who: Is engaged in business or other commercial activity, and owes no more than $2,490,925 to all creditors, excluding debt obligations owed to insiders, for example family members of the debtor. Other special procedures reserved for small businesses in Chapter 11 include no creditor’s committee requirement and no disclosure statement requirement. But in exchange for special treatment as a small business, the debtor is required to satisfy additional filing and reporting, as well as be subjected to additional trustee oversight.
    • If you are considering filing for Chapter 11 bankruptcy, you should be advised that the process can be very expensive, lengthy, risky and complicated, as there are many stipulations and requirements that must be satisfied. Please do not hesitate to seek counsel from an experienced Columbus Chapter 11 bankruptcy attorney who can help you prepare and plan for the process.

Contact Bryant Legal, LLC

At Bryant Legal, LLC, we have the experience you need to assist you with your bankruptcy needs no matter what they are.  We will review the financial situation of you or your business.  Together, we will decide the best way to proceed.  For more information about your legal issue, contact a Columbus or Toledo attorney at Bryant Legal, LLC.

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