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Bankruptcy Law - Chapter 13

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The law firm is very concerned that the client would not be able to pay anyjudgment 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.
You have been tasked with putting together a report on the following issues:

Can the client file Chapter 7 bankruptcy? Explain
Can the client file Chapter 11 bankruptcy? Explain
Can the client file Chapter 13 bankruptcy? Explain
What are the benefits and the negatives of the client filling bankruptcy?
If the client is a partnership, how does this affect what type of bankruptcy it may file?

**Please provide the discussion of Chapter 13 bankruptcy and Explain can the client file chapter 13.

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https://brainmass.com/law/tort-law/bankruptcy-law-chapter-13-236367

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RESPONSE:

1. This is a group project, and my portion is to discuss Chapter 13 bankruptcy and explain if the client can file chapter 13.

Case: 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.

This client can file Chapter 13 bankruptcy. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years. In other words, when an individual files for bankruptcy under Chapter 13 of the Bankruptcy Code, the individual wants to have the ...

Solution Summary

Based on the scenario, this solution discusses Chapter 13 bankruptcy and explains if the client can file for Chapter 13 bankruptcy. It is also supplemented with extra information on Chapter 13.

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Bankruptcy is used as a method to reformulate an individual's or an organizations financial position. A most common mistake in organizations and in one's personal life is their consistence in overextending his/her individual assets and financial resources. During the current recession in the United States, small businesses and some corporations were forced to file bankruptcy, for a plethora of different reasons mostly resulting in an organizations inability to generate an adequate return on their investment (ROI), thus causing the organization to shut the doors of their operation. Nevertheless, the bankruptcy advantage allows an organization to continue operations as long as the organization are compliant within the regulations surrounding the bankruptcy requirments.

There are significant advantages to filing bankruptcy which include:

? Reorganizing your financial position.
? Obtaining a second chance at financing.
? Re-establish credit
? Ability to pay off creditors without the negative ramifications of delinquency accounts that appear on your credit report.
? Ability to keep possession of property regardless of what is owed to the creditor.

Bankruptcy is used as a method to reformulate an individual's or an organizations financial position. A most common mistake in organizations and in one's personal life is their consistence in overextending his/her individual assets and financial resources. During the current recession in the United States, small businesses and some corporations were forced to file bankruptcy, for a plethora of different reasons mostly resulting in an organizations inability to generate an adequate return on their investment (ROI), thus causing the organization to shut the doors of their operation. Nevertheless, the bankruptcy advantage allows an organization to continue operations as long as the organization are compliant within the regulations surrounding the bankruptcy requirments.

There are significant advantages to filing bankruptcy which include:

? Reorganizing your financial position.
? Obtaining a second chance at financing.
? Re-establish credit
? Ability to pay off creditors without the negative ramifications of delinquency accounts that appear on your credit report.
? Ability to keep possession of property regardless of what is owed to the creditor.
Chapter 7 bankruptcy is a petition a debtor files with the court as an acknowledgement of being unable to pay off a debt. The trustee of the court gathers all documents pertaining to the debtors assets and liquidates those assets to pay off creditors. As a result of the most recent bankruptcy change, debtors are now obligated to consult with a professional debt counselor and develop a possible repayment plan according to the debtor's income, whereas in the past a debtor could file bankruptcy and the debt would be eliminated without consulting with a debt counselor (U.S. Courts, 2010).

Benefits-

? Under the filing of Chapter 7 bankruptcy, creditors must stop their efforts to collect payment while the bankruptcy is in effect for the reason that the debtor is protected by law against wage garnishments, harassing phone calls from collectors and
lawsuits.

? The debtor may upgrade the chapter he/she filed (i.e. 11, 12, or 13) depending on the requirements set forth.

? One of the most cost effective options available.

Drawbacks--

? Although the creditors collection practices will stop automatically during the filing process, it will only stop for a limited time and certain creditors may be exempt, i.e. governmental funding or facilitators of student loans.
Chapter 11 bankruptcy is a petition that can be filed by either the debtor (voluntary) as well as the creditor (involuntary). The objective of Chapter 11 is to allow the debtor to retain their assets and continue organizational operations while paying off creditors over a period of time (U.S. Courts, 2010).

Benefits-

? Flexibility in payment of filing fee.

? Suspension of foreclosures, judgments, repossessions, etc. for a period of time on all properties that arose prior to the filing of chapter 11.

? Plan established to repay debt while keeping organization and maintaining the day-to-day operations.

? An automatic stay goes into effect as soon as the chapter is filed.

Drawbacks -

? An automatic stay is different in this chapter in which case the stay is minute and will give the debtor a reprieve from payment for a short period of time during the negotiations of the repayment plan.

? Expensive filing fee ranging from $1000-$10,000

? Under certain circumstances the creditor can petition the courts to lift the automatic stay in order to seize the debtors property, sell it and apply the proceeds to the debt. 11 U.S.C.§ 362 (d).
Chapter 13 bankruptcy is a petition that allows a debtor who has regular income to adjust their debts and allows him/her to pay creditors off over a short length of time (three to five years). This option is ideal for homeowners going through foreclosure, chapter 13 halts the foreclosure process and allows individuals to maintain their homes. Chapter 13 will act as a loan consolidation program for the homeowner which will allow the debtor to pay the trustee a certain monthly amount "based on what was already agreed upon," the trustee in turn will distribute the payment to the creditor. Although Chapter 13 assists homeowners with payment issues and foreclosures, the debtor will still be responsible for making his/her mortgage payments on time from that point on (U.S. Courts, 2010).

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