Personal Bankruptcies

Foster & Smith represents debtors and creditors in:

►            Chapter 7 Liquidation Cases.   Chapter 7 Bankruptcy is used to eliminate most of a debtor’s unsecured debt, such as credit cards, medical bills, debts arising out of repossessions or foreclosures, most personal loans, bank loans, and sometimes old tax debts.  In Chapter 7, the debtor must continue to make his regular home mortgage payments and car payments if he wants to keep his home or car, or he may elect to give the car or house back to his creditors so that he will not owe the creditor any money.  In Chapter 7 the debtor is usually allowed to keep his home, if he is current on his mortgage payments and does not have excessive equity in his home. He is usually allowed to keep his car, clothes, furniture, retirement plans, and most other personal items.  The federal courts allow the debtor to use what are known as "exemptions," which are usually based upon state law, to keep these personal items. 

►            Chapter 11 Reorganization Cases.  Relief under Chapter 11 of the bankruptcy code is most commonly used by businesses.  However, individuals can also commence Chapter 11 cases.  This usually occurs in the case of individuals engaged in business as sole proprietors or who have substantial assets that they would lose if they filed a chapter 7 case and who do not qualify to file a Chapter 13 Case.  In Chapter 11 reorganization proceedings, a plan of reorganization is proposed to creditors, acceptance of the plan is solicited (after appropriate disclosures are made), and the plan is put into effect. 

►            Chapter 13 Wage Earner Cases.  Chapter 13 Bankruptcy is sometimes called a repayment plan or wage earners plan.  Usually, the main purpose for filing a Chapter 13 is to stop the foreclosure of the debtor’s home, the repossession of his car, or to stop IRS harassment and wage garnishments.  A chapter 13 plan allows the debtor to pay over time the amount he is behind on his mortgage, car payments, or taxes, and pay a small portion of his other debts, under a 3-5 year repayment plan, in which he makes monthly payments to a court-appointed trustee. 

►           Out-of-Court Workouts.  In out-of-court workouts, debtors and creditors restructure the debtors’ debt so that they can retain their assets without the need to file a bankruptcy case.