We have compiled a few commonly asked questions and provided a response that should help you have a better understanding of bankruptcy. If you have any further questions, please feel free to contact us.

Business Bankruptcy Questions:

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• What types of Bankruptcy are available for my business?

• What types of debt can bankruptcy help me get rid of?

• What is unsecured debt?

• I filed bankruptcy before, can I file again?

• Can I discharge my student loans and alimony through bankruptcy?

• Why would I file Chapter 13 instead of Chapter 7?

• I still owe money on my car, what will happen with that debt?

• How will bankruptcy effect my credit?

• Am I better off consolidating my loans?

• I am behind on my mortgage payments and the bank is foreclosing, can bankruptcy help?

ANSWERS

Q: What types of Bankruptcy are available for my business?

A:There are two main types of bankruptcy proceedings that are available to businesses:

• Chapter 7 is available corporations and partnerships. In this proceeding, businesses debtors may seek a discharge of their unsecured debts, meaning that they are extinguished by order of the bankruptcy court at the end of the proceeding. In a Chapter 7 Business Bankruptcy, the business ceases operation.

  A Chapter 7 is a liquidation proceeding, which means that the business' assets, if any, are liquidated. The proceeds are distributed to creditors according to the priorities rules established by the federal bankruptcy code.

• Chapter 11 is a reorganization proceeding. A business in financial trouble may elect to file a Chapter 11 petition to try to reorganize outstanding debts and continue to operate the business. There's an automatic stay, just like any other bankruptcy proceeding. Unlike a Chapter 7 proceeding, though, a business that files a Chapter 11 proceeding will become a debtor-in-possession, and there will initially be no bankruptcy trustee appointed. The debtor-in-possession is given an opportunity to prepare a plan of reorganization that must be approved by a majority of the creditors. If a plan is approved by the creditors and is confirmed by the court, it binds both the debtor and the creditors to its terms of repayment. Under the plan, the debtor-in-possession can reduce debts by repaying a portion of its obligations and discharging others. It can also terminate burdensome contracts and leases, recover assets, and rescale operations to get back to profitability. Under this chapter, a business normally goes through a consolidation period and comes away with a reduced debt load and a reorganized business. Plans can call for repayment out of future profits, sales of some or all of the assets, or a merger or recapitalization. Generally, the plan of reorganization must provide for paying creditors at least as much as they would have been entitled to be paid in a Chapter 7 liquidation proceeding.

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Why should I hire an attorney to file Bankruptcy?

There are a lot of services and do-it-yourself-kits on the internet that claim can prepare your bankruptcy petition for a low fee. However, only a licensed attorney is allowed to provide you with legal advice, such as which set of exemptions to claim, whether or not liens can be avoided or how to navigate through the new bankruptcy laws. Since these services cannot offer legal advice, if you make a mistake on your petition, you could risk loosing your home, having some debt follow you after bankruptcy, or even having your bankruptcy dismissed.[top]

What is unsecured debt?

Unsecured debt is any debt that you owe that is not secured by property you own: namely collateral. For example, a mortgage is a secured debt since your home is used as collateral in the event you default. Another example is an auto loan which a lien is placed on your title.[top]

I filed bankruptcy before, can I file again?

Yes, there is no limit to the number times you can file bankruptcy as long as it has been at least eight years since your last discharge.[top]

Can I discharge my student loans and alimony through bankruptcy?

No, except in very rare situations, certain debts such as support payments, government funded student loans, and taxes are not dischargeable in bankruptcy.[top]

Why would I file Chapter 13 instead of Chapter 7?

Generally, if your income falls above the median income for your size family in Massachusetts, then you must file Chapter 13. However, there are a lot of factors that can influence what chapter you should file. For more information, you should contact us. [top]

I still owe money on my car, what will happen with that debt?

You will have several options in bankruptcy regarding automobile note. You can reaffirm the debt and keep making payments. The debt will then survive bankruptcy and you can keep your automobile. Another option is to surrender the automobile and have any remaining debt discharged through bankruptcy.[top]

How will bankruptcy effect my credit?

A bankruptcy will stay on your credit report for a maximum of 10 years. However, that does not mean that you will have bad credit for that period. Credit can be reestablished by through reaffirming credit accounts, such as automobile notes and mortgage payments.[top]

Am I better off consolidating my loans?

That depends. Consolidation is also reported as derogatory credit on your credit report, just like a bankruptcy. However, there is no guarantee that your creditors will participate in your consolidation, with bankruptcy they don't have a choice.[top]

I am behind on my mortgage payments and the bank is foreclosing, can bankruptcy help?

In some circumstances, bankruptcy can help. For example, by filing a Chapter 13, you can include your past due amounts in your repayment plan and continue to pay your normal monthly payments. However, every circumstance is different so it is important that you contact us immediately.[top]

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At Grantham & Associates, P.C., we believe that you are entitled to know what you are paying for. Therefore, we offer a free one hour consultation with all of our new potential clients. This gives you an opportunity to meet, or speak with the attorney that will be working with you on your matter. If we can't help you, then we will do our best to find another lawyer who can.

Grantham & Associates is a Massachusetts debt relief agency located in the greater Boston, Cambridge Area. We help people in the Eastern Massachusetts area file for bankruptcy relief under the U.S. Bankruptcy Code.