WHAT IS BANKRUPTCY?

Bankruptcy is a court proceeding where people or businesses which are unable to meet their obligations and are at risk of losing their assets turn for protection.

There are several options in filing a bankruptcy. There is Chapter 7, 11, 12 & 13 relief available. Chapter 7 & 13 are the forms most used by people and small businesses. The differences are explained in this newsletter.

The decision to file bankruptcy is not one which should be taken lightly. It will have serious effects on your credit rating and on your ability to obtain credit in the future.

We offer a free consultation to determine if bankruptcy is right for you.

Please Fill out our online form and find out what we can do to assist you. We offer a free initial consultation to all clients, and special payment plans to those who need them.
 

WHAT CAN BANKRUPTCY DO FOR ME?

• Stop Foreclosures
• Stop Repossessions
• Stop Garnishments
• Stop Lawsuits
• Stop Harrassment
• Eliminate Debt
• Stop Tax Penalties
• Repay Over Time
• Save Businesses
   

If I file Bankruptcy, WILL I LOSE EVERYTHING?

NO. There are a number of exemptions provided by law which protect you from losing your assets. Generally, you are allowed to exempt the following: $100,000 equity in your home, a household full of furniture and furnishings, $1,500 equity per person in vehicles and tools of your trade. There are many other exemptions, also. Of course, with secured debt like your home or your car, you will still have to make the payments if you wish to keep the item.
 
CHAPTER 7

A Chapter 7 is a straight liquidating bankruptcy. All debts are discharged, with certain exceptions. Chapter 7, like Chapter 13, also stops repossessions, foreclosures and garnishments. There is no plan or plan payments in a Chapter 7.
 
CHAPTER 13

Chapter 13 is also known as a wage earners bankruptcy. In order to file a Chapter 13 a person must have a regular source of income. In Chapter 13, a plan is filed with the Bankruptcy Court which provides that a certain amount of money is paid into the plan and distributed to some or all creditors.

The biggest advantages to Chapter 13 are as follows: If a debtor is behind on payments to creditors who hold security, such as house payments or car payments, the past due payments can be put in the plan and paid over the life of the plan. This is very important when a person is behind several payments and is unable to catch them up.

A second advantage is that with secured debt, like cars, the debtor only has to pay the creditor what the collateral is worth, not what is owed. This often happens in situations where a person owes more on the vehicle than it is worth. Also, in these circumstances, the amount of interest is reduced to 9%, rather than what the contract calls for. This often results in a significant savings.

TAXES

Past due taxes create a unique situation in Bankruptcy. Taxing authorities are entitled to preferential treatment and payment. Generally, if a tax is over 3 years old from the time it was assessed or from when the return was filed, it can be discharged in Bankruptcy. Taxes less than 3 years old are not dischargable and are entitled to be paid in full, plus interest. Most penalties, however, are discharged in Bankruptcy.

STUDENT LOANS

Student loans are in a special category.   Generally, they are not dischargable in bankruptcy. However if repayment of them is determined by the court to constitute an undue hardship, them may be discharged.  Also, they may be paid in payments through a Chapter 13.

BUSINESSES

When a business has financial difficulties, they may be one of several different types. There may be a shortage of cash flow to make current payments. Often, businesses will survive if they are given a reasonable chance to reorganize. A Chapter 13 is for businesses that are unable to pay their debts, but which could become profitable if they were given some opportunity to delay payments on debts and to reduce the amount of debt which they owe. Also, equipment or vehicles may have been repossessed and the business might need those items to continue to operate. In these situations, a Chapter 13 will give some breathing room and give the business an opportunity to propose a plan to reorganize. Chapter 11 is a more complicated form business reorganization which may prove beneficial to larger businesses with debt problems.

FARM /RANCH

Farmers and Ranchers have special needs to keep their businesses alive. Congress has responded with Chapter 12 . Chapter 12 gives farmers and ranchers a chance to reorganize their debt and to extend payment terms. This can often mean the difference between losing the family ranch or farm and surviving.

ABOUT MARTELLE LAW OFFICES

Martelle Law Offices is a full service law firm with emphasis in debtor and creditor representation. Martin Martelle is the owner and has been practicing law for 20 years. It is the policy of the office to give a free consultation. The office prides itself on first class, tough and agressive representation of clients.

Please Fill out our online form and find out what we can do to assist you. We offer a free initial consultation to all clients, and special payment plans to those who need them.

 
 

MARTELLE LAW OFFICES

1020 Main St. Suite 440
Boise, Idaho 83702
Tel: (208) 345-8060