The thought of filing for bankruptcy can be frightening to many people. The stress of limited finances and creditor harassment can cause some to make poor choices, but these choices may only worsen an already serious situation. The way to avoid making further mistakes is to contact a bankruptcy law attorney who knows the right steps to take at every juncture of the process.
Learn More About Chapter 7 Bankruptcy
The new bankruptcy laws that went into effect in October of 2005 did not, we repeat, did not put Chapter 7 bankruptcy relief out of reach for most people. Now, it just takes more work by attorneys who help people to get it.
At Prescott & Pearson, P.A., we help people in Minneapolis, St. Paul and throughout the state of Minnesota to make the right choices with respect to bankruptcy — and to obtain the sorely-needed debt relief afforded by Chapter 7 of the U.S. Bankruptcy Code. Our attorneys focus solely on bankruptcy and have handled nearly 70,000 cases. Said differently, this is all we do and we do it well.
Call or contact our lawyers today for a free consultation regarding any bankruptcy or debt relief issue.
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Filing for bankruptcy protection isn't the end of the world. More and more, in fact, people from all walks of life are finding that bankruptcy is their only real option for getting out from under crushing amounts of debt and regaining control of their lives. For the answers, experienced attorneys and help you need — contact Prescott & Pearson P.A. in New Brighton, Minnesota.
Stop creditor harassment. Stop foreclosure proceedings. Start living life without the crushing debt or the fear that comes with it. Bankruptcy can make all of this happen for you, and more. Talk to the experienced bankruptcy lawyers of Prescott & Pearson P.A. about your debt relief options: 651-968-8096 or 888-366-0827 (toll free).
Alternatives to Chapter 7 Bankruptcy
The term "workout" is used to describe a non-bankruptcy negotiated modification of debt. More simply stated, a workout is an out-of-court agreement between a debtor and his or her creditors for repayment of the debts between them, which is negotiated without all the procedural complications — and perhaps the stigma — of the bankruptcy process. A lawyer at Prescott & Pearson P.A. in New Brighton, Minnesota who is experienced in bankruptcy and debtor-creditor law, can advise both debtors and creditors about whether a non-bankruptcy workout is their best course of action.
Why Choose a Workout?
There are a variety of reasons why a debtor might prefer a workout to bankruptcy. By entering into a voluntary agreement with creditors, the debtor avoids the stigma that attaches to bankruptcy but achieves the same results — discharge from all or a portion of his or her debts. In fact, a workout discharge can be even broader than a bankruptcy discharge. In addition, a workout discharge does not affect the debtor's rights to file a future bankruptcy, whereas certain types of bankruptcy discharges do. The main advantage of a workout is that both the debtor and the participating creditors voluntarily enter into it. In a workout, unlike bankruptcy, the majority of creditors cannot cram down concessions on dissenting creditors.
Non-Bankruptcy Alternatives
Compositions and Extensions A "composition" is a contract between the debtor and two or more creditors in which the creditors agree to take a partial payment in full satisfaction of their claims. An "extension" is a contract between the debtor and two or more creditors in which the creditors agree to extend the time for payment of their claims. An agreement may be both a composition and an extension; in other words, an agreement to accept less money over a longer period of time.
There is no requirement that all of the debtor's creditors agree to a composition or extension, but most of them must voluntarily support it for it to work. Creditors that do not agree to the workout are not affected by it and remain entitled to pursue other remedies to collect the debts owed to them. Although they can theoretically proceed to recover the full amount due, they forfeit the right to benefit automatically from whatever partial payment the composition would have allowed had they taken part.
Assignment for the Benefit of Creditors An assignment may be a simpler and cheaper alternative to bankruptcy for a small business that wishes to be liquidated. The debtor assigns all nonexempt property to an assignee who acts as a fiduciary for the benefit of creditors. The assignee liquidates the assets and distributes the proceeds pro rata among creditors who have filed claims with the assignee. An assignment is voluntary, but all creditors must accept it.
Bankruptcy Alternatives
Chapter 11 — Filing for bankruptcy under Chapter 11 may be an option for debtors such as corporations, sole proprietorships and partnerships that are engaged in business. These debtors may wish to stay in business and avoid liquidation. Under Chapter 11, the debtor can have debts reduced or have the time for repayment extended.
Chapter 13 — Chapter 13 may be an option for individual debtors with regular income. Chapter 13 allows individual debtors to save their homes from foreclosure by coming up with a payment plan for past due payments. Sole proprietorships may also be eligible to file for Chapter 13.
Conclusion
Non-bankruptcy alternatives such as compositions and extensions have several benefits. However, in some circumstances, a debtor is afforded greater protection by a formal bankruptcy, and attempting a workout may just prolong the financial agony and delay the inevitable. An attorney who has experience in bankruptcy and debtor-creditor law at Prescott & Pearson P.A. in New Brighton, Minnesota can help both debtors and creditors determine whether a workout is the best option for debt repayment, or whether bankruptcy is the better choice in their particular circumstances.
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