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Akron Bankruptcy Law Blog

The basics of Chapter 11 bankruptcy

This blog recently discussed a national toy retailer that filed for Chapter 11 bankruptcy protection. In general, there are two primary types of bankruptcy protection for both businesses and consumers struggling with debt. The two types of bankruptcy can be broadly understood as reorganization bankruptcy and liquidation bankruptcy. Chapter 11 reorganization bankruptcy is a bankruptcy protection option for businesses with heavy debt burdens that is designed to help them reorganize their debts.

Chapter 11 bankruptcy is intended to help the struggling company stay in business and return to profitability. Business reorganization allows a struggling company to develop a reorganization plan that may reduce their costs and seek additional sources of funding. At the same time, filing a petition for bankruptcy protection initiates an automatic stay during which time creditors cannot pursue collection actions.

Major toy retailer files for Chapter 11 bankruptcy protection

There are a variety of different bankruptcy protections for companies and consumers alike. Major toy retailer Toys R Us recently announced it is filing for Chapter 11 bankruptcy protection. The company is facing a changing retail landscape and significant debt. The company has $5 million in debt and operates 1,695 stores. The Akron area is home to 3 of its stores and one Babies R Us store. The company plans to continue normal operations through the upcoming holiday season.

The Chapter 11 filing for the company keeps at bay creditor collection actions and allows the company to continue to operate while it proceeds through the court-supervised reorganization process. The toy retailer announced that is already has obtained $3 million in lender financing. It will enjoy protection from creditor claims during the bankruptcy process as it endeavors to use the process to get back on its feet.

Ways Chapter 7 bankruptcy may be able to help

Financial struggles can impact any family and may arise for a variety of reasons including unexpected medical expenses, unexpected home repairs or because of a divorce. Each of these circumstances is challenging enough on its own without the additional stress financial strain also brings. Chapter 7 bankruptcy can provide important protections for individuals struggling with overwhelming debt who find themselves in a variety of stressful financial circumstances.

Chapter 7 bankruptcy is sometimes referred to as a debt elimination or debt discharge bankruptcy which can help the filing party discharge unsecured debt and enjoy a fresh financial start. Unsecured debt is debt that is not linked to collateral and can include medical bills, credit card debt and some personal loans. Some other types of debt may also be eliminated as well. It is helpful to have trained guidance throughout the bankruptcy process to understand how it applies to the specific needs and circumstances of the filing party.

How Chapter 13 bankruptcy can help with foreclosure

This blog recently discussed Chapter 7 bankruptcy protections and how they can help individuals struggling with debt. There are different types of personal bankruptcy protections designed to help individuals in different situations who are struggling with debt enjoy a fresh financial start. Chapter 13 bankruptcy is another type of personal bankruptcy protection that can also help those faced with the daily stress of debt and those facing other concerns such as potential foreclosure as a result.

For both types of personal bankruptcy, it is important to note that once the filing party has filed the bankruptcy petition and started the bankruptcy process, an automatic stay goes into effect and remains in effect during the bankruptcy process. An automatic stay prevents creditor collection actions during the bankruptcy process and can be helpful to a filing party to provide a little breathing room.

3 red flags that signal you are heading toward bankruptcy

Is your personal debt continuing to grow? If so, this is a problem you cannot ignore. You must be diligent in recognizing the signs of overwhelming debt and determining when it might be time to declare bankruptcy to start anew. 

It can be easy to miss red flags when you are overwhelmed with stress. That is why we have compiled a list of three warning signs you are on the path to bankruptcy. 

Protections associated with Chapter 7 bankruptcy

Chapter 7 bankruptcy provides an option for individuals struggling with overwhelming debt to enjoy a fresh financial start. A fresh financial start, however, does not necessarily mean starting from scratch. Chapter 7 bankruptcy protections provide exemptions that protect certain property from the liquidation process. Different types of personal bankruptcy are available to help individuals in different situations so being familiar with what the options are is beneficial.

In general, Chapter 7 bankruptcy is a liquidation bankruptcy process that provides for the liquidation of non-exempt property to repay creditors. Certain categories of property are protected from the liquidation process and are considered exempted. There are both state and federal exemption laws so it is important to be familiar with what they are.

A look at consumer bankruptcy

People throughout the United States, including many from Akron, Ohio, and the surrounding area, may find it difficult to pay their bills at times. While most people are responsible and understand the ramifications of overspending, sometimes necessary and unexpected purchases must be made with a credit card, which can add up.

A serious injury or illness could lead to significant medical costs. With the ever-changing economy, a person may find themselves out of work. During these times, a victim may find it necessary to pay for their basic necessities through their credit card. This could include rent or a mortgage, car payments, water or utility bills or even money for gas or food. Also, people going through a divorce may find that they are responsible for credit card debt that their ex racked up without them knowing about it.

Determining whether bankruptcy is right for you

While the stock market has been on the rise as of late and the United States continues to recover from the recession from a few years ago, many Americans, including some from the greater Akron, Ohio, area, still suffer from financial distress. Whether you are struggling to find work or simply cannot get beyond existing debts and bills, you are not alone in your plight, and help is available.

If you are considering personal bankruptcy, it is important to understand which options are available. Chapter 7 bankruptcy is a liquidation bankruptcy. This means that a trustee will obtain and sell off all your nonexempt property to pay off your debts. When this has been fulfilled based on the conditions from the court, your debts will be relieved.

Eligibility and procedures for Chapter 7 bankruptcy, part 2

Last week we spoke about the basics of eligibility for Chapter 7 bankruptcy. Bankruptcy is an option for individuals, partnerships corporations and business entities in Ohio and nationwide that wish to relinquish non-exempt property to a trustee who will liquidate the assets to pay off debtors. Once the legal obligations have been met, the debtor will be able to start over with the remaining debts forgiven. So how does the process work?

The process begins when a debtor files a petition with the bankruptcy court. The debtor must also provide a schedule of both assets and liabilities, a schedule of expenditures and current income, a statement listing the debtor's financial affairs and a schedule of executory contracts and unexpired leases. The debtor must also have additional documentation including a certificate from a certified credit counselling organization as well as a debt repayment plan, their monthly net income and any expected increases of income or expenses.

How to explain bankruptcy to adult relatives

One reason you may hesitate about filing for bankruptcy is the shame you feel about it. While it is true that people from all walks of life, including rich people, get into financial trouble and file, you do not want your family members looking down their noses at you.

The good news is that they may never need to know. In fact, if you file Chapter 13 and keep your house and car, there is virtually no reason your family members need to know. The news is positive for Chapter 7, too. It is unlikely you would have to relinquish any assets. However, you may be in a position where you will have to move, or you simply want to tell your family. Here are some tips for explaining to them what is going on. (A different approach may be needed for your children.)