Although a Chapter 11 filing can be an option of last resort for most businesses, being proactive and exploring options at the earliest opportunity can reap great rewards. Using a targeted Chapter 11 filing can work wonders, especially where asset sales are concerned. One recent example illustrates this principle very clearly. Business owners should understand that the Chapter 11 process is their friend in a crisis, not something to be avoided.
Category Archives: Bankruptcy Attorney Kansas City
Myths And Misconceptions About Bankruptcy
One of the downsides of living in the media age is the fact that there are too many voices in the echo chamber. Many of these voices are people who are not informed on the subjects that they are speaking about. Worse yet, some of these voices have presences in the media and are in a position to offer “advice” and “guidance” on complicated subjects that plays to peoples’ fears, guilt, and shame.
We see this phenomenon sometimes when we meet with distressed and anxious people for the first time. Some people have been listening to information peddled by media financial celebrities who are selling books, audio products, or “financial advice.” Sometimes people have been listening to rumors from random friends and acquaintances.
Selling Bankruptcy Estate Property In A Chapter 11 Case
Business bankruptcy cases can be different from personal cases, in that assets will often need to be sold off soon after a petition is filed. This can happen in personal cases as well, of course, but businesses cases can sometimes carry with them a special sense of urgency. Cash often needs to be raised, or the business may need to shed itself of unwanted assets.
Real estate cases see this issue with some frequency, where closing and sale dates are negotiated in advance. Assets can be sold before, during, and after confirmation of a Chapter 11 plan. Sections 363 and 1123 of the Bankruptcy Code govern preconfirmation and postconfirmation sales of estate assets, respectively.
The Credit Counseling Class And Financial Management Class In Bankruptcy
One of the requirements that was instituted in bankruptcy cases in 2005 was the need for debtors to take two separate “classes” as part of their bankruptcy case. These classes can be completed through private companies specifically designed for the purpose of offering them. They typically cost between $25 to $40 to complete. The first class is called the “credit counseling class”, and it is supposed to be completed before the bankruptcy case is filed.
It can be done over the phone, or on the internet, and it typically takes about 45 to 60 minutes to complete. Once it is finished, the debtor and the attorney are provided with a completion certificate. This certificate is filed with the court when the case is filed. Basically, the debtor is asked a series of questions about his or her income and expenses.
Homeowners Dues, Homes Association Dues, And Timeshare Dues In Bankruptcy
One issue that sometimes arises in a bankruptcy case is the treatment of homes association dues, homeowners’ dues, and timeshare dues. Some property owners live in neighborhoods or developments that charge them a monthly fee for various services, such as grounds maintenance, snow removal, maintenance of public areas, and related things. Not all homes have these, of course. But some do, and it is important to understand how the treatment of these dues interact with bankruptcy law.
If a debtor files bankruptcy, any homeowners’ or association dues that are in arrears at the time of the filing are handled within the bankruptcy case. However, any post-petition dues that arise after the case is filed will need to be paid until the debtor’s interest in the property is terminated. For example, suppose a debtor files a Chapter 7 case and the monthly homeowners dues are $90 per month. At the time of filing there is $850 owed to the homeowners association. Also suppose that the debtor wants to surrender the property. The arrearage amount that existed at the time of filing ($850) is handled like the other unsecured debts (assuming there is no lien on the property), and would normally be discharged along with the other unsecured debts. However, the debtor technically still would be responsible for the ongoing monthly homes association dues until his rights in the property were terminated (normally, when the foreclosure sale is completed and any redemption period has run).
This issue can get complicated. The key questions that normally need to be asked are:
1. Has the homeowners association put a lien on the property? If so, lien avoidance or lien stripping issues can come into the picture.
2. Does the debtor want to stay in the property?
3. What chapter of the bankruptcy code has the debtor filed under? Things can change depending on if someone is in a Chapter 7, 11, or 13 case.
A common problem that can arise is when a debtor wants to surrender a timeshare or home in a bankruptcy case, but the mortgage company takes a long time to complete the foreclosure. The debtor has filed the case, but the mortgage company delays the foreclosure. Technically, the debtor is still responsible for the monthly homeowner dues from the filing of the bankruptcy until the termination of his or her rights in the property (after the foreclosure sale).
Fortunately, in the real world, this problem often has a way of working itself out. Homes associations are often willing to work out resolutions to these issues when they arise. Municipal governments are becoming more sensitive to the problem of abandoned properties sitting idle and awaiting foreclosure. It’s all part of the continuing fallout from the mortgage and financial crisis of the past few years. Make sure you consult with your attorney about any homeowners, homes association, or timeshare dues that you may have, so that you aren’t hit with any surprises.
Read More: Converting A Chapter 11 Bankruptcy Case In Kansas City
Secured Debts In Bankruptcy
When a bankruptcy case is filed, the various types of debts are classified into various categories: secured, priority unsecured, general unsecured, or administrative claims. This post will discuss secured debts and how they are often treated in a bankruptcy case. What is a secured debt? A secured debt is a debt in which the lender has some sort of collateral as a “security” for a loan.
In other words, the lender has the ability to repossess some collateral if the debt is not paid. Typical secured debts are home loans, car loans, boat loans, and furniture loans. In order for a creditor to claim secured status, they are required to do certain technical things, such as record their lien, and do a few other things.
Creditor Claims In A Bankruptcy Case
When a bankruptcy case is first filed, notices are mailed out to all of the listed creditors. The notices contain information about deadines for filing “proofs of claim”, and lists objection deadlines for issues a creditor may have with a case, or for the filing of an adversary proceeding (these are not common).
It is the creditor’s responsibility to see that its proof of claim is filed on time and in the right format with the bankruptcy court. Its failure to do so can mean that it will not share in any assets of the bankruptcy estate. If a claim is not timely filed, a creditor would have to show the court that its failure to file on time was due to some “excusable neglect.” This is not easy to show.
Chapter 7 Discharge In Bankruptcy In Kansas City
Overland Park Bankruptcy Lawyer
When a Chapter 7 bankruptcy is filed, the trustee’s responsibility is to see if there are any assets to administer for the benefit of the creditors. In the typical Chapter 7 case, there are no assets to administer. If there are, the case will remain open until all the approved claims are paid. Typically, the bankruptcy court clerk will mail out notices of discharge in a Chapter 7 case about 4 or 5 months after the case has been filed. Keep in mind that this is just a rough time frame. There is no rigid rule on this.
The Meeting Of Creditors In A Bankruptcy Case In Kansas City
Prairie Village Bankruptcy Attorney
When a bankruptcy case is filed (Chapter 7, 13, or 11), the bankruptcy court schedules a meeting about 30 days from the date of the filing of the case. This meeting is called the “meeting of creditors” or the Section 341 meeting (as required by the Bankruptcy Code). In theory the purpose of the meeting is to give interested creditors an opportunity to appear and inquire about issues related to the filed schedules.
Cramdowns In A Chapter 13 Bankruptcy In Kansas City
In a Chapter 13 bankruptcy, secured and unsecured loans are treated differently. In a Chapter 13 bankruptcy, secured debts (i.e., loans with a security interest, such as a loan on a house, car, boat, trailer, etc.) are treated in different ways.
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