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There were nearly 1.7 million bankruptcies filed in 2003, up 7.4% from the 1,547,669 filings in 2002. In fact, bankruptcy fillings have increased nearly 100% since 1994. To help sort your way through the complicated maze of overcrowded bankruptcy courts, you need the assistance of knowledgeable legal advocates, with years of experience and demonstrated trustworthiness.

Bankruptcy-just the sound of it evokes strong feelings in most people. It's rarely anyone's first choice when trying to cope with overwhelming debt, the decision to file bankruptcy can be the right one when made with full awareness of all its consequences.

Debtors considering bankruptcy must bear in mind that filing bankruptcy stays on their credit report for up to ten years, making it difficult to get future credit such as mortgages, and that any credit they are extended will probably cost more in terms of interest rates and fees. And some debts must still be paid. Accordingly, it is essential to seek the advice of an experienced bankruptcy attorney before making potentially life-altering financial decisions.

A high level of indebtedness among households could lead to increased household delinquencies and bankruptcies. If you find yourself facing insurmountable debt and bankruptcy appears to be your only option, it is imperative that you seek the advice of an experienced bankruptcy attorney.

Frequently Asked Questions about Bankruptcy

Q: Why are so many consumers filing bankruptcy?

A: Americans generally have overextended themselves by using too much easily accessible credit to finance overspending, combined with lack of savings. With no financial safety net, sudden crises such as medical emergencies, job losses or failed businesses, death or disability of spouses, or divorce can result in insurmountable debt. On average, a typical bankruptcy debtor is employed and middle-aged with a high school education and relatively low income.

Q: What alternative courses of action are there to filing bankruptcy when facing overwhelming debt?

A: Short of bankruptcy, a debtor may enter into mediation with creditors or negotiate workout agreements to extend due dates, lower interest rates, partially forgive debt or alter other terms. A debtor may execute an assignment of property for the benefit of creditors (ABC), wherein the debtor puts assets in the trust of a neutral third party to pay creditors. A business debtor can sell the business, negotiating the satisfaction of debt as part of the deal. Other creative options to bankruptcy exist.

Colorado Bankruptcy & Family Law Attorneys

Dealing with financial difficulties can cause stress, tension, and problems in the home. You may feel like you are in over your head, and don't know where to turn. Bankruptcy can offer an opportunity to restructure or eliminate your debts, and start you on the road to financial recovery. It can also stop foreclosures, repossessions and creditor harassment. We can assist you in filing for bankruptcy.

We focus our bankruptcy practice on assisting individuals in filing for Chapter 7 and Chapter 13 bankruptcies. Both Chapter 7 and Chapter 13 stop collection activities such as creditor phone calls, foreclosures and repossessions. However, each chapter operates differently, and applies to different types of people. We can also explain, and help you to explore, possible alternatives to filing for bankruptcy.

Bankruptcy - An Overview

Bankruptcy is a legal vehicle that provides relief to individuals and businesses in serious financial trouble and protects their creditors to the extent possible. Generally, the bankruptcy process assesses the debtor's assets and liabilities and provides a structure within which the debtor is allowed to keep some property and ordered to satisfy as many eligible debts as possible, according to an order of priority established by law. Remaining debts are discharged, except those of certain types, like domestic support orders, debt obtained by fraud and most tax debt.

The traditional stigma of bankruptcy has faded and been replaced by the view that it is a fresh start after a time of trouble. Most bankruptcy debtors have experienced unexpected and extreme financial shock, such as that caused by sudden events such as job loss, business failure, death, divorce or illness.

In such cases, filing bankruptcy may be the right answer. If you are facing serious financial challenges, it is very important to seek the counsel of an experienced bankruptcy attorney to help you to assess your legal options.

Bankruptcy law is primarily federal and administered by the federal courts. However, the various states' consumer and commercial laws do play important roles in certain bankruptcy issues and some circumstances.

Bankruptcy is an available option for individual consumers, businesses, farmers and municipalities. There are two major bankruptcy types: liquidation and reorganization. Since the imposition of means testing by bankruptcy reform in 2005, only relatively low-income and less stable debtors are allowed to liquidate. For practical purposes, many of these debtors have so-called no-asset cases where all of the debtors' property is exempt from the liquidation requirement and eligible debt is discharged without any property being sold.

Chapter 7

Chapter 7 of the Bankruptcy Code governs liquidation bankruptcy, available to individuals and businesses. Upon the filing of a Chapter 7 bankruptcy petition, the bankruptcy court issues an "automatic stay" that stops most collection proceedings against the debtor. A bankruptcy trustee is responsible for gathering the debtor's nonexempt property, if any, liquidating it and distributing the proceeds to the creditors in order of legal preference. This process often leaves some creditors' debts unpaid when there are not enough assets to cover liabilities.

For an individual consumer debtor, these remaining debts are discharged and no longer the responsibility of the debtor; however, certain types of debt are nondischargeable and survive the bankruptcy, such as alimony or child support. For a business debtor, the liquidated business does not survive the bankruptcy.

Reorganization

A reorganization bankruptcy is more appropriate where there is ongoing income that can be used to pay creditors, at least in part. Reorganizations are governed by several chapters of the Bankruptcy Code. Chapter 11 generally controls reorganizations for individual debtors with high debts or for larger business entities. Chapter 13, on the other hand, generally covers individual consumer debtors with lower debts. Farmers can file for reorganization under Chapter 12 and municipalities under Chapter 9.

Filing for reorganization also generates an automatic stay of most collection activity. The debtor then develops a repayment plan to pay debts over a three- to five-year period through a bankruptcy trustee. At the successful conclusion of the payment plan, if certain conditions are met, remaining dischargeable debt is cancelled. If the debtor fails to make payments under the plan or fails to make alimony, child support or certain tax payments, however, the court may either dismiss the case or convert the reorganization to liquidation.

Involuntary Bankruptcy

In addition to bankruptcies filed voluntarily by debtors, creditors have a legal remedy through "involuntary bankruptcy" petitions under Chapters 7 or 11. If either a minimum level of debt is present or a minimum number of creditors, creditors can file a bankruptcy petition against a debtor to ensure that assets are distributed fairly among creditors through the bankruptcy process. Creditors must take care only to file meritorious involuntary petitions, however. Penalties for filing improper involuntary petitions can be steep.

Conclusion

Bankruptcy law can benefit debtors and creditors alike, depending on the circumstances. If you feel that a bankruptcy proceeding may benefit you or your business, you should consult a skilled bankruptcy attorney to help determine your best course of action. Experienced bankruptcy attorneys have the knowledge to help their debtor clients get out from under formidable debt and to assist their creditor clients in collecting what is rightfully theirs.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.