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Chapter…huh?

Chapter…huh?. All you need to know about bankruptcy R. Manny Montero, Esq. Michael A. Ostroff, Esq. 301-588-8100. Chapters of Bankruptcy. Chapter 7: Liquidation – individual debtors/businesses Chapter 9 – Municipalities

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Chapter…huh?

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  1. Chapter…huh? All you need to know about bankruptcy R. Manny Montero, Esq. Michael A. Ostroff, Esq. 301-588-8100

  2. Chapters of Bankruptcy • Chapter 7: Liquidation – individual debtors/businesses • Chapter 9 – Municipalities • Chapter 11: Reorganization/repayment – continuing businesses and complex individual debtors • Chapter 12 – Farmers and fisherman • Chapter 13: Reorganization/repayment - individual debtors

  3. Consumer Bankruptcies

  4. Consumer Bankruptcies

  5. Consumer Bankruptcies

  6. Discharge - Nature and Extent Pre-petition debts – from the day you filed backward Personal Liability vs. In rem(or property) liability No calls, collections or lawsuits Not dischargeable- Student loans, child support, some taxes, fraud, etc.

  7. Cars Equity – exemptions, liquidation and payment loans Reaffirmation Agreements – Continuing liability Chapter 7 Redemption – a new loan to “buy the value” of your underwater car Chapter 13 Cramdown – paying the “value”, spreading out payments, and lowering your interest rate

  8. Mortgage Issues in Chapter 13 Avoiding foreclosure by curing arrears Lien avoidance – discharge of the debt and voiding the lien upon completion Cramdown – payment of the “value” and lowering the interest rate (investment properties only) Surrendering property (also available in Chapter 7)

  9. The “Liquidation Test” in Chapter 13 Paying the “liquidation value” of non-exempt equity Valuation issues – Houses, businesses & income levels Note: You do not actually liquidate (or sell) assets in a Chapter 13 . . . unless you chose to

  10. The Best Efforts Test in Chapter 13 Paying what you can “reasonably afford” Cutting unreasonable, extravagant and unnecessary expenses Common Problems: Charity, higher education, support to the family and losses on businesses/investment property

  11. The Means Test Chapter 13- 3 year plan vs. 5 year plan * Add $7,500 for each additional person

  12. Other Considerations Lawsuits, garnishments, and foreclosures Income – when and how do you get paid? Preference payments – paying family and friends before others Use of Credit Cards • Bank Accounts: • Credit Unions and cross-collateralization • Freezing of account

  13. Don’t be ashamed . . . • Rooted in Biblical mandates: “At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD's release.” ~ Deuteronomy 15:1-2 • Provided for in the U.S. Consitutional • “The Congress shall have the Power . . . To establish uniform Laws on the subject of Bankruptcies throughout the United States” ~ Article I, Section 8 • And socially acceptable . . .

  14. To name but a few . . . Thomas Jefferson* Abraham Lincoln Ulysses S. Grant William McKinley Henry Ford Walt Disney Milton Hershey Burt Reynolds H.J. Heinz P.T. Barnum Kim Bassinger Larry King Donald Trump M.C. Hammer Willie Nelson Charles Goodyear Elton John Oscar Wilde Johnny Unitas Debbie Reynolds Stan Lee Jerry Lee Lewis Mark Twain

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