BO’Keefe, Rivera & Berk represents clients in all facets of consumer and business bankruptcy proceedings. The bankruptcy laws exist to help individuals and businesses facing financial difficulties, often for reasons that are out of their control. Unfortunately, the American media does not paint an accurate picture of bankruptcy, and can often mislead people concerning many aspects of bankruptcy laws and procedures. The “social stigma” of bankruptcy is often vastly overstated in the media, as well. Do not allow yourself to believe what you hear or read in the media about bankruptcy. You are entitled to use the bankruptcy laws to your advantage, just as your creditors have utilized contract laws to force you to repay loans at excessive rates of interest.
You have the right to be informed of the facts concerning bankruptcy, as well as non-bankruptcy options. At O’Keefe, Rivera & Berk, we take the necessary time to learn about your case. We carefully consider various solutions to the problems presented to us, and we explain our strategy in non-legal terms that are easy to understand. We encourage you to ask questions about your case.
A brief description of each Chapter of bankruptcy is available on this website. To obtain a free consultation, via telephone or in person, please contact us directly.
Chapter 11 Bankruptcy
O’Keefe, Rivera & Berk represents small businesses in Chapter 11 reorganization proceedings. Our focus in Chapter 11 is on allowing your viable business to operate without interference from aggressive creditor action. Chapter 11 can be a powerful means of forcing certain creditors to accept pennies on the dollar over time, modifying the terms of secured loans to favor the client, and eliminating bad contracts with vendors. Even if you desire to close your business, Chapter 11 can be sometimes be used to maximize the value of the business, and to eventually liquidate it as a going concern. This option can reduce the personal exposure of corporate officers and directors.
Chapter 7 Bankruptcy and Other Options for Going Out of Business
Chapter 7 Bankruptcy is one option for businesses that wish to stop operating and close their doors. While Chapter 7 can occasionally be a useful tool to stop creditor action and to wind up the affairs of the business, a corporation does not receive a Chapter 7 discharge. The officers and/or directors of the corporation may have personal exposure to the corporate liabilities through personal guarantees, which will survive the corporate bankruptcy. Therefore, Chapter 7 only makes sense for businesses in limited circumstances. Other options for going out of business, such as State law dissolutions and assignments for the benefit of creditors, may be better than Chapter 7.
O’Keefe, Rivera & Berk will tailor a specific strategy for closing your business, taking into account the value of business assets, the amount and types of debts, the degree of personal exposure of business owners, and many other factors. In addition to the business, we are focused on you as an individual. We want you to be able to leave your former business behind and move forward with future endeavors, without restrictions.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is appropriate for most individuals seeking debt relief. Chapter 7 enables consumers to completely eliminate most types of debt, and to obtain a true fresh start in as little as 4 months. After the 4 month period, clients can begin rebuilding credit. While Chapter 7 is considered a “liquidation” process, State law provides exemptions that protect property and personal belongings from being sold to satisfy debts.
Certain income qualifications do exist for Chapter 7. However, a high income will not necessarily disqualify you from filing. Many factors are involved in analyzing each case for eligibility, including household size, charitable contributions, medical expenses, and mandatory payroll deductions. Income may be completely irrelevant for clients with primarily business debts.
Most Chapter 7 cases are no-asset cases, meaning that no assets are liquidated. We perform a thorough analysis, prior to filing the case, in order to determine whether clients may risk losing an asset in Chapter 7. If an asset cannot be protected by exemptions, we can often negotiate with the Chapter 7 trustee in order for the client to retain ownership of the asset.
In some cases, it will be necessary to schedule a personal in-office consultation in order to determine eligibility for Chapter 7. For this meeting, you will likely need a recent tax return and 6-month income history. These consultations are always free.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a method of financial reorganization for individuals and sole proprietorships. Chapter 13 can be an effective means of stopping foreclosure, preventing repossession, and eliminating debts that are not dischargeable in Chapter 7. Chapter 13 can also be an excellent solution when Chapter 7 relief is unavailable due to high income or other reasons. Chapter 13 does not involve liquidation of assets, unless it is voluntary liquidation. In Chapter 13, some of your creditors will likely receive full repayment, but others may receive as little as ten cents on the dollar.
Many clients carry vehicle loans with high interest rates which can be lowered in Chapter 13. In some cases, clients will only repay the blue book value of the vehicle during the case, and a small percentage of the remaining balance of the loan beyond the blue book value. We set up our plans to pay off vehicle loans as early as possible, in order to minimize the amount of interest paid to the finance company.
In Chapter 13, we will file a debt consolidation proposal called a Plan. The Plan specifies many details with regard to treatment of creditors: the amount of repayment, length (between 3 and 5 years), order of payment, whether interest will be paid, and other details. A trustee will be appointed to accept one fixed payment from you each month and distribute money to creditors.
In many situations, we have found Chapter 13 to be an enormous relief to clients. Juggling payments to many different creditors can be an enormous burden to families. Simply consolidating the debts into one affordable monthly payment can alleviate anxiety and inject much needed simplicity into the lives of consumers. Fortunately, Chapter 13 can provide many other benefits besides just consolidation, including lower interest rates, extending terms of secured loans to make it easier to pay for them, and stopping creditor collection activity such as foreclosures and repossessions.
Chapter 11 Bankruptcy
We often utilize Chapter 11 bankruptcy for individuals who are not eligible for Chapter 13 or Chapter 7 relief. Because certain debt limits exist for Chapter 13 cases, Chapter 11 may be the only option for certain clients who need debt relief. Chapter 11 frequently makes sense for individuals with high incomes and large debt burdens.
Chapter 11 Bankruptcy carries certain benefits that are not present in Chapter 13. In Chapter 11, there is no trustee appointed to be in charge of your case who may oppose your reorganization Plan. Because there is no trustee, we have been successful in confirming Plans with very reasonable payment terms in Chapter 11 cases involving high-income clients.
Unlike Chapter 13 Plans, Chapter 11 Plan terms are not limited to 5 years. Further, payments are not required to be made each month. We often set up our Chapter 11 Plans to have one annual distribution to creditors.
In contrast to Chapter 13, Chapter 11 clients are not required to begin paying creditors immediately after filing. Often, there is a substantial window before payments must be made.
While many other bankruptcy firms do not handle these cases, O’Keefe, Rivera & Berk specializes in Chapter 11 for individuals, and our attorneys have been tremendously successful in this practice area.