Personal Debt, foreclosure and unemployment are all situations that often lead to significant financial challenges within a family or for an individual. Bankruptcy, whether it is Chapter 11 or Chapter 7, may be the only option available to those experiencing financial difficulties. Generally, since the recession starting in 2008, attorneys, including those in Denver have noticed a significant increase in bankruptcy filings.
Tom Martino, previously seen on TV and heard on Radio discussing consumer issues and known for operating the troubleshooting.com website filed for bankruptcy over one year ago. Specifically, on September 2, 2011, he filed for Chapter 7 bankruptcy in an effort to obtain a fresh financial start. Martino is now trying to convert that individual bankruptcy to chapter 11, which is normally used for business bankruptcies. His most recent amendment to that bankruptcy filing listed total assets of $2.3 million and liabilities of $46.4 million, mostly due to failed real estate ventures.
Chapter 7-bankruptcy protection will allow the person filing to get rid of most of their debts and start over, with significant drawbacks often including, but not limited to, loss of property and a significantly impacted credit score. A person must qualify under the "means" test which takes into account a variety of factors, one being income of the individual in order to determine the eligibility of that person.
The bankruptcy code does allow individuals to convert to a Chapter 11 bankruptcy as long as they are eligible to file under that Chapter. Chapter 11 bankruptcies, while primarily intended for business, can be used by individuals in rare cases. This Chapter allows an individual to put creditors "on-hold" while creating a plan for post-bankruptcy profits and generation of income. This chapter is often more expensive and time consuming.
Bankruptcy, under any chapter, can still be a necessary option to help individuals through economic hardships, explaining why we are still continuing to see many filings throughout the U.S.
Source: Denver Business Journal, "Martino files to convert bankruptcy to Chapter 11," Heather Draper, October 8, 2012