Types of Bankruptcy
Smith, Montgomery & Associates, P.C., comprised of lawyers and highly-trained staff and one of the leading law firms in Southwest Missouri, is a full service law firm with over 65 years of combined experience.
Chapter 13 Bankruptcy is designed to assist clients wipe out the debts they can't pay and reorganize their personal debts and assets. Chapter 13 bankruptcy can be used also for businesses. Under a Chapter 13 Bankruptcy, people can also keep their property that may have significant equity. If payments on a mortgage, automobile or other secured asset are behind, Chapter 13 will allow you to make up the payments over the duration of the bankruptcy effectively stopping a foreclosure, garnishment or repossession. If income taxes are owed for prior years, you can include the tax debt and repay through your Chapter 13 bankruptcy as well, and no additional penalties or interest will be added while you are in the Chapter 13 bankruptcy. In many instances all or most unsecured debt, including medical bills, credit card balances, etc., can be eliminated in a Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy takes 3 to 5 years to finish; however, our Bankruptcy Lawyers can get you protection from your creditors as soon as your case is filed. Also, the fees for a Chapter 13 bankruptcy are lesser than in Chapter 7 bankruptcy, plus in many situations the legal fees can be spread out over a period of time.
Chapter 7 Bankruptcy is designed to assist clients with mostly medical, credit card or other unsecured debt that they are unable to pay. It is also designed to offer options for debts that are secured by property, such as homes or automobiles. The debts owed on secured assets can be "reaffirmed," meaning you simply agree to continue to make the payments as stated in the original loan documents. If you find that you owe more on a debt that the property is worth, you can surrender the property back to the lender and not have to repay the balance of the debt. Chapter 7 Bankruptcy usually takes four (4) to six (6) months to complete. Upon completion of the bankruptcy, all unsecured debt is eliminated. The major drawback to a Chapter 7 bankruptcy is that all legal fees must be paid prior to obtaining the court's protection from your creditors.
Chapter 11 Bankruptcy is a business reorganization that allows the business to negotiate with creditors and lower their debt while continuing to operate. Chapter 11 should only be used by businesses that intend to continue to operate or need time to affect an organized closing of the business. This is ideal for those businesses that have been struggling to meet their obligations in this challenging economy. Chapter 11 applies to all businesses except farming, which would file under Chapter 12 Bankruptcy. Many businesses with smaller debts may qualify for debt workout under Chapter 13, which costs substantially less and is much simpler to administer.
Chapter 12 bankruptcy is similar to Chapter 11 bankruptcy but deals with the circumstances that are specific to farming and not found in other enterprises.
Call the Debt Planning Lawyers at Smith, Montgomery & Associates; we will help you make informed decisions about all of the financial options available to you.
