Many people in this economy are finding themselves struggling to keep up on their car payments. When you get behind on your auto payment, you run the risk of your car being repossessed or “repoed.” A car loan gives the bank, finance company, or title loan company a lien on your vehicle: this is called a security interest. What does this mean? It means that the creditor (the “secured creditor”) has the right to take back the collateral (the car) if the payments are not made for a certain length of time. Banks or finance companies holdings such loans can use “repo men” to find and take back (“repossess”) cars that are in default on their payments.
The official bankruptcy forms and schedules underwent significant changes to their appearance, layout, and presentation on December 1, 2015. It was one of the most important overhauls of the forms in their history.
What does this mean for you? Or does it make any difference at all? We will explore some of the answers here.
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.
A Chapter 11 petition can be filed for an individual or a business. In either situation, there are significant responsibilities that a debtor has in the progress of a case. When the petition is filed, an entity called a “debtor in possession” is created. The debtor is the “debtor in possession” unless a trustee is appointed in the case.
Technically, the debtor-in-possession is considered a separate legal entity. And unless a trustee is appointed, the debtor-in-possession has all of the rights, powers, and duties of a trustee. The debtor is his or her own trustee. This can be a tremendous advantage that Chapter 11 gives debtors over other types of bankruptcy cases (Chapter 7 and Chapter 13). A Chapter 11 debtor can avoid liens, set aside transfers, file adversary proceedings, and do many other things to expedite the reorganization process.
A debtor will need to use his or her “cash collateral” during the course of the case. What is cash collateral? It’s defined as cash, negotiable instruments, documents of title, deposit accounts, securities, or other cash equivalents. A Chapter 11 debtor also is required to open up a special “debtor-in-possession” bank account that will be used during the course of the case. When monthly operating reports are filed, the bank account statement is attached as part of the monthly operating report.
Local courts also have a lot of authority in deciding on the general guidelines for cases. Bankruptcy Rule 9029 permits local courts to set up rules as they deem necessary, provided they don’t conflict with the federal rules of bankruptcy procedure.
An attorney is required in a Chapter 11 case. Your attorney will help you file your monthly operating reports, comply with court orders, submit information as requested to the US Trustee, and perform a myriad of other duties in your case. But what is especially important is that your Chapter 11 attorney be an explainer. Being able to explain complicated concepts and procedures to someone who likely has never participated in a bankruptcy case before is a critical skill, and one that is often underappreciated.
At Phillips & Thomas LLC, we take pride in our ability to be great explainers and conveyers of information. Bankruptcy cases, and especially Chapter 11 business or personal cases, are participatory in nature. It’s a collaborative process. For a case to be successful, the debtor needs to participate and show interest in the case. And this comes with understanding fully what is going on. At Phillips & Thomas, we know how to explain in detail the following things:
1. Accounting for the property of the estate in monthly operating reports.
2. Examining proofs of claim filed in a case, and objecting as needed or necessary.
3. Providing information as required or requested to the US Trustee, such as insurance information or tax records.
4. Making a final report and accounting to the court regarding the estate and the completion of the Chapter 11 plan.
Being able to explain and convey these concepts is a critical skill for the Chapter 11 attorney to have. Far too often, clients overlook the need for having an attorney who can explain these and many other involved concepts. We make sure that clients understand all of the key duties and responsibilities that come with being in a Chapter 11 case.
The reality is that there isn’t a “typical” profile of someone considering a debt reorganization, liquidation, or restructuring. Financial difficulties can happen to anyone at any time. The typical client spans a very wide spectrum. There are, however, common situations that lead people to situations where they need help. These situations often (but not always) involve one or more of the following scenarios:
- Job loss with extended period of underemployment or non-employment.Extended medical problems which result in unmanageable medical bills and treatment programs.
- Mortgage payments that keep increasing, especially with variable mortgage rates, with a person being unable to cope with the increases.
- Business owners who see their core business decline or evaporate, with a large amount of debts from vendors or suppliers.
- Marital issues leading to divorce, with each party being saddled with large amounts of unanticipated debt.
- The repossession of an asset that has left a person with a large “deficiency” judgment on something, like a boat, house, furniture, or other piece of collateral.
- Unforeseen family emergencies of any kind that cause people to drain away their security reserves.
- Tax issues that have been in hibernation for a long time, and that suddenly become a problem.
Bankruptcy is one of the best, if not the best, ways to manage tax debt. A person can wipe out tax debt in certain situations, or restructure it with possibly wiping out interest and penalties.
This list is by no means exhaustive. There are many other situations that can cause problems for people. Gambling debts, fines and costs in court cases, and various other situations can also act to hurt people. The list above does show just how common and varied the bankruptcy experience really can be. You are not alone. It’s a lot more common than you think. When you empower yourself by taking action, you will find a great burden released from your shoulders.
If you would like to schedule a free initial appointment to talk about bankruptcy, please give us a call at 913-385-9900 or send an email to firstname.lastname@example.org.
No one ever said going into business would be a bed of roses. It’s difficult and requires a constant attention to details. And when you’re starting out, the last thing you want to think about is the possibility of a reorganization. We understand that.
However, when things get rough, you need to be aware of all your options.
The key word here is “all“.
One of the things we have consistently noticed is a psychological dynamic with business owners that prevents them from considering options that might actually help them in the early stages of financial distress.
Welcome to our Kansas City bankruptcy and criminal defense blog.
This blog came about as a result of some recent discussions by attorneys and staff at Phillips and Thomas LLC. We were talking about how we saw the same general questions come up over and over again by people considering filing bankruptcy or who are facing criminal cases. Our attorneys have met with many thousands of people over the past 15 years who were considering filing bankruptcy in Kansas City metro area, or who have faced criminal cases, and we have seen the same topics come up repeatedly in many of these meetings. We believe our blog is the most extensive and informative for these two practice areas (bankruptcy and criminal defense) in the metro Kansas City area.
We have discussed how we often see people dealing with debt problems and criminal issues in the Kansas City area, using information about bankruptcy and criminal defense that they thought was true, but was in reality incorrect or did not apply to their situation. Often times people have lived their life under these false assumptions for years and thus have caused themselves, and their families, needless hardship and suffering.
This blog is not designed to replace specific legal advice for individual situations. You should always talk to an attorney regarding your particular situation. Also, one of the best suggestions we can make is to talk to a knowledgeable attorney immediately, even if you are just in the information gathering phase. The sooner you get legal advice, the better. We do hope that this blog can provide some general information for people with debt or criminal problems who are considering filing bankruptcy or facing criminal issues in the Kansas City metro area. We will be updating this blog frequently, so please feel free to check back.
If you live in the Kansas City metro area and you would like to meet with one of our attorneys concerning your debt problems, bankruptcy questions, or criminal issues, please call us at 913-385-9900 or email us at email@example.com to schedule a free consultation.
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