The law firm is very concerned that the client would not be able to pay any judgment levied against it by the courts in a civil tort case. Due to recent robberies and legal troubles with the client, your company is worried that the client may have to file bankruptcy. The client has just over $400,000 in debt and is not incorporated. Your committee has been tasked with putting together a report on:
What are the benefits and the negatives of the client filing bankruptcy?
There are several benefits for the client filing for bankruptcy. The bankruptcy will discharge the debts of the client allowing the client to start afresh in his financial matters. If the client files for bankruptcy, he is forgiven from most of his unsecured debts. The benefit is that the collection efforts must stop. The moment you file for bankruptcy for your client there is a stay on collection efforts. If a creditor of your client persists in trying to collect the debt, the creditor will be held in contempt of court and forced to pay damages.
The bankruptcy will allow your client to keep his car provided he continues to make installment payments if they are due. If your client is a first time bankrupt, he will get his discharge after one year from the date of bankruptcy ...
Over 500 words on the benefits and negatives of a client filing for bankruptcy.