You are afraid to answer the phone and open the mail. You are humiliated when, yet again, the salesperson tells you that your credit card has been declined. It is time to put an end to the stress of embarrassment and harassment; contact a knowledgeable bankruptcy attorney.
Understanding Chapter 7 Bankruptcy Law
If you are overburdened with unsecured debts such as credit card balances, medical bills, payday loans and deficiency balances, you may be eligible to file Chapter 7 bankruptcy. This procedure may give you debt relief and the opportunity to make a fresh start financially.
At Trezza & Associates, we can guide you through the Chapter 7 process. Experienced Arizona bankruptcy lawyer Stephen Trezza will carefully go over your options with you.
Below is some general information about Chapter 7 bankruptcy. Contact us for a free consultation with a knowledgeable, locally-based Tucson attorney.
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Our firm does everything we can to streamline the bankruptcy process so that it is less stressful and you can know ahead of time what to expect. To set up a free consultation with an experienced bankruptcy lawyer, contact us today at our offices in Tucson.
In Arizona, it is possible to file Chapter 7 bankruptcy and still keep many types of property. Attorney Stephen Trezza is familiar with all of the exemptions that are available under state law and will explain the likely consequences if you choose to file bankruptcy.
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 Arizona Law Group of Trezza & Associates, LLC in Tucson, Arizona 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 Arizona Law Group of Trezza & Associates, LLC in Tucson, Arizona 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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