Bankruptcy

A Bankruptcy Lawyer Can Help You Through Rough Financial Times.


Admitting that your finances are in such dire shape that you are considering bankruptcy can be depressing and downright frightening. Creditors are calling and there’s nothing in your bank account to pay them with. You don’t even want to answer the phone anymore.

There are many reasons that people find themselves in this situation–from extreme medical bills to unemployment, seriously overextended credit, and marital problems. Know that you are not alone and that you will be able to recover from this temporary setback. There are just under one million bankruptcies filed in any given year. After going through the process, you will be able to get back on your feet again.

Here are a few questions to help you assess if bankruptcy should be considered:

  • Do you only make minimum payments on your credit cards?
  • Do you use credit cards to pay for necessities?
  • Are you considering debt consolidation?
  • Are you unsure how much you actually owe?
  • Are bill collectors calling you?
  • Does the thought of sorting out your finances make you feel scared or out of control?

If you answered yes to two or more of these, it’s time to consider your options.

Chapter 7 Bankruptcy Works for Most People.


Chapter 7 bankruptcy is the simplest and most common form of bankruptcy, especially if your debt is mainly consumer debt. It is available to individuals, married couples, corporations and partnerships. A Chapter 7 bankruptcy liquidates your assets to pay off as much of your debt as possible. The cash from your assets is distributed to your creditors. In exchange, your debts are discharged, and you can start over. You will be able to keep exempt property, also called the “necessities of modern life,” but will need to give up many other assets to earn a discharge.

A means test is utilized to determine if an individual is eligible for Chapter 7, which was instituted with the 2005 amendments to the bankruptcy code. If you qualify, the entire process only takes three to four months, but the record of your bankruptcy will stay on your credit report for ten years.

Chapter 13 Bankruptcy is for High Earners.


If you make too much money, you will need to apply for Chapter 13 bankruptcy. This is where individuals and sole proprietorships are eligible to reorganize their debts. There are still eligibility restrictions on secured and unsecured debt for Chapter 13, but the limits are much higher. A Chapter 13 bankruptcy allows you to keep your property and catch up on missed mortgage, car, and non‐dischargeable priority claims like taxes and child support. Payments are determined by the means test formula. It is available when you have a regular income and you can make some payment to creditors over a three to five‐year period. While the payment plan must provide enough money to pay the priority claims in full, payments to other creditors may be little or even nothing. Excessive debt is discharged at the end of the payment plan.

A UCC Filing will Protect Your Business When You Extend Credit.


So, what are the options to protect your business from clients that go bankrupt? As a businessperson, your specialty is running a business and developing products or services that stand apart in the marketplace. Yet if your product is expensive, there may be times when your customers need to finance their purchase or want to enter into a lease agreement. Now you’ve also become a lender, something that may not be familiar to you. A new reality these days is that even the most solid‐looking corporate customers can fail, jeopardizing your cash flow.

This is where the UCC, or Uniform Commercial Code, comes into play. UCC is a set of laws concerning commercial transactions which can give you a security interest when you extend business credit. It allows a lender the right to foreclose on a borrower’s collateral should the borrower default on the loan or lease. With a UCC filing, a creditor who has made a loan against an asset gains an advantage over other creditors because a public claim has been made. There is still no guarantee that the client’s bankruptcy process will result in your being paid, but your UCC filing does put you in a more advantageous position than other unprotected creditors.

It can all be very confusing and there are specific steps that need to be taken to get started on your debt relief journey. Call The Law Offices of Cesar A. Montalvo to speak with our bankruptcy lawyer and discuss your options for resolving your financial problems. We will help you determine the best route for you personally, whether it be consulting with a debt counseling service, Chapter 7 bankruptcy or Chapter 13 bankruptcy, and help protect your company against potential client financial issues with a UCC filing.