When filing for bankruptcy, the best thing to do to make the process as seamless as possible is to hire a bankruptcy lawyer. A bankruptcy lawyer will do a lot of things for you, not least of which is guide you through the entire process (which can be very complicated, unless you are very well versed with the bankruptcy code). One of the most common types of bankruptcies chosen by individuals is Chapter 13 bankruptcy.
Here are some helpful pointers for your Chapter 13 bankruptcy filing.
Firstly, Chapter 13 bankruptcy is only for individuals and sole proprietors, not for companies or partnerships. If you wish to file for bankruptcy for your company or partnership, you need to file it under Chapter 11 bankruptcy.
Secondly, Chapter 13 bankruptcy is preferred by the bankruptcy court and is easier to gain approval compared to Chapter 7 bankruptcy (the other type of bankruptcy filing for individuals). This is because Chapter 13 bankruptcy is involves a payment plan stretched out over a period of time (up to 5 years) whereas Chapter 7 is liquidation bankruptcy where your non-exempt assets are sold off to pay for your debts.
Thirdly, there are some prerequisites to filing for Chapter 13 bankruptcy. For instance, you need to be earning a steady income. It does not have to be a high income but it must be consistent. If you only earn income sporadically it may not be considered good enough to qualify you for Chapter 13. The consistent income requirement is to ensure that you and your family have enough finances to sustain a reasonable living while repaying your debts under Chapter 13. If your income is inconsistent, the bankruptcy court may decide you do not have enough to survive while undergoing bankruptcy and hence your bankruptcy plan will not be approved.
Fourthly, you must not have debts exceeding the limit set by the bankruptcy court. If you do, your bankruptcy filing is not likely to be approved. This limit may change from time to time.
Fifthly, you must be current with your tax filings. If you have not filed your taxes for certain years, you need to bring it up to speed before filing for bankruptcy. You may still have tax debts but you must not be behind in your tax filings.
Finally, you must fulfill the residency requirements of your state. Depending on which state you live in, there are certain requirements set by the state government. Generally, you file for Chapter 13 bankruptcy in the state you reside in, but certain states have a time requirement in that you must have been living in that state for longer than a certain time to be permitted to file for bankruptcy there. Otherwise, you would be required to file for Chapter 13 in the last state you lived in (or the one you lived in for the longest time).
For more information regarding Chapter 13 (or Chapter 7) bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Dec 28th, 2011. Comment. 
American Airlines filed for bankruptcy protection after its attempts to win a labour dispute with pilots ended unsuccessfully. Together with its parent company, AMR Corp, the airlines filed for bankruptcy November 29 after spiralling fuel costs had taken its toll.
Over the past decade, AMR Corp was the only major airline company that managed to avoid bankruptcy whereas other airlines used bankruptcy protection to restructure their labour agreements and reduce costs. As a result, American Airlines became the only major airline to still fund worker pensions and pay the highest labour costs in the industry. Many industry observers have been expecting American Airlines to follow suit by filing for Chapter 11 bankruptcy and they were not mistaken.
This year, the airlines industry in the US is set to experience a slowdown as travel demand recedes. Most major airlines have cut down on their services as a result of the weak demand and American Airlines is no different.
In bankruptcy papers, AMR disclosed that its cost cutting measures have not been enough to reduce the company’s losses largely due to skyrocketing fuel prices that pushed its cost of operations up by 40% in the third quarter in just one year. The company acknowledged that it must change its “uncompetitive cost structure”. “Without addressing the realities of the marketplace, AMR cannot be competitive with its peers,” according to the bankruptcy filing.
Shares of American Airlines, the nation’s third largest airlines after United Continental and Delta Airlines, plunged 45% since the end of September. Last week, its shares fell to its lowest price since 2003, the year when AMR almost filed for bankruptcy.
In its Chapter 11 bankruptcy papers, AMR listed its assets worth $24.72 billion against its liabilities of $29.55 billion. AMR said it has $4.1 billion in cash. Nevertheless, AMR confirmed that both American Airlines and its regional counterpart, American Eagle will continue flying its normal routes throughout the bankruptcy proceedings. AMR today appointed Thomas Horton as chairman and chief executive to replace Gerard Arpey who retired.
The pilots union greeted the news about American Airline’s bankruptcy with solemnity, describing it as a “solemn occasion”. While the move did not take the pilots by surprise, the union expressed their disappointment in finding themselves working for “an airline that has lost its way,” according to a statement by David Bates, president of the Allied Pilots Association.
AMR’s top two rival companies, Delta Airlines and Continental Airlines have used bankruptcy to restructure operations, cut costs and find new merger partners. Delta bought Northwest Airlines and Continental Airlines was bought over by UAL Corp and renamed United Continental Holdings. Delta and Northwest Airlines filed for bankruptcy in 2005. Another airline, United Airlines and US Airways filed for Chapter 11 bankruptcy earlier in 2002.
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Filed under Chapter 7 (Tampa) by on Nov 28th, 2011. Comment.
In a recent report, the Administrative Office for the US Courts said that the bankruptcy rate has fallen by 8% between October 1, 2010 and September 30, 2011. Indiana State also saw a drop in bankruptcies year on year for the fiscal year ending September 30.
There were 1,467,221 bankruptcy filings throughout the country in the latest year compared to the 1,596,355 million filed the year before. This year, there were 10% less Chapter 7 filings and 4% less Chapter 13 filings whereas Chapter 11 filings fell by a significant 16%. In the latest report on the fiscal fourth quarter, the number of bankruptcy filings fell by 15% compared to the same period last year.
Chapter 7 bankruptcy is where the debtor liquidates all disposable assets to pay off debts while Chapter 13 bankruptcy is a court approved payment plan for individuals to pay off their debts over a period of up to 5 years. And chapter 11 bankruptcy is for businesses to reorganize their finances to repay their debts.
In the state of Indiana, a total of 48,438 bankruptcies were filed last year in the fiscal year ending September 30. This included 983 business bankruptcies. But this year during the same period, the number of bankruptcies came up to 41,199 bankruptcies, including 775 business bankruptcies. The lower number of business bankruptcies is largely due to the fact that banks are now more willing to give time to businesses to pay up their debts rather than initiate bankruptcy proceedings.
The 7th Circuit Court of Appeals, which includes Indiana, Illinois and Wisconsin, said there was a 10% drop in bankruptcy filings overall according to official figures. Last year, there were a total of 161,182 bankruptcy filings compared to 145,018 in the most recent year.
The Northern District of Indiana’s bankruptcy filings fell by 15.7%, from 19,538 to 16,477. Out of these, the number of Chapter 7 filings declined by 16%, while the Chapter 13 filings fell by 13.4%. There was also good news for the Southern District where overall filings went down by 14.5%, to 24,727 from 28,905 a year ago. Chapter 7 bankruptcy filings also fell by 13.8% while Chapter 13 filings declined by 15.5%.
As a result of these improved figures, Indiana’s national bankruptcy rating also improved to seventh in the number of overall filings in the most recent year, compared to fourth the year before. At the same time, Indiana also rose from third to sixth in Chapter 7 filings and dropped from 10th to 11th in Chapter 13 filings.
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Filed under Chapter 7 (Tampa) by on Nov 14th, 2011. Comment.
Bankruptcy Judge Grants Philadelphia Orchestra Approval for Labor Agreement
After lengthy negotiations, a federal bankruptcy court judge has approved a new labor agreement between the Philadelphia Orchestra Association board and its musicians’ union. The agreement will last for four years and comes into effect November 1.
In a written order last Thursday, bankruptcy judge Eric Frank confirmed he would approve the deal. Under the renewed terms of the agreement, the number of musicians will be reduced from 105 to 95 through retirements and attrition and musicians’ salaries will be cut by about 15%. At present, the minimum salary for Philadelphia Orchestra musicians is about $125,000 a year.
There will also be amendments to current pension benefits. Presently, the musicians enjoy a guaranteed monthly benefit upon retirement under a defined benefit plan. This will now be changed to a defined contribution plan which shifts retirement planning and investing to workers but doesn’t guarantee a specific amount of money based on years of service. Under the new agreement, the pension change will now go for approval by Pension Benefit Guarantee Corp, a federal agency that insures the pensions of more than 44 million US citizens.
The Philadelphia Orchestra Association board estimates the new agreement will bring about a savings of about $38 million over the four years.
The renowned Philadelphia Orchestra became the first major US orchestra to file for Chapter 11 bankruptcy protection in April this year. The 111-year old orchestra has been facing financial difficulties for a long time due to shrinking attendances, an aging audience, fewer donations, high labor costs and the effects of the recession.
Last month, the bankruptcy judge granted the Orchestra approval to terminate its business relationship with Peter Nero and Philly Pops, which was going on for the last 6 years but which the Orchestra claimed was detrimental to its finances.
But the Orchestra is not out of the woods yet. The next step in reorganization will be to renegotiate terms of its rental agreement with the Kimmel Center. The Kimmel Center says the Orchestra owes it about $1.4 million in unpaid rental.
The developments augur well for the continued running of the Orchestra. Although it is not good enough to meet its initial goal to emerge from bankruptcy by the end of the year, it should be able to do so by early next year.
If you are struggling financially, consider filing for bankruptcy as a means to start afresh. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Oct 31st, 2011. Comment.
Bill may end Delaware Bankruptcy Capital Status
The Chapter 11 Bankruptcy Venue Reform Act of 2011 proposed by leaders of the House Judiciary Committee seeks to prevent court-shopping and compel companies to file for bankruptcy in the primary district they do business or where most of their assets are located, not in the state they are incorporated in. Lamar Smith and John Conyers, the Texas Republican and the Michigan Democrat respectively, who introduced the bipartisan bill, said in a statement that the bill is “to ensure maximum input from all affected stakeholders.” If this bill is passed, Delaware may lose its status as the foremost venue of US bankruptcy cases, which would cost the state approximately $100 million per year in lost revenue.
But Delaware’s Congressional delegation disagreed based on the experience and expertise of the bankruptcy courts at Wilmington, Delaware. Representative John Carney, a Democrat, said in an e-mail, “Delaware’s courts are our nation’s bankruptcy specialists.” Delaware’s two US senators, Democrats Thomas Carper and Chris Coons, also oppose the bill.
63% of all Fortune 500 companies are incorporated in Delaware. Delaware first became the center for bankruptcy filings about a century ago in response to New Jersey’s quest to become America’s corporation capital. The state passed the Delaware General Corporation Law 1899 with the aim of making state regulations less burdensome and develop a more predictable basis of court procedures for business disputes. Since then, courts in Delaware have set the pace and established authoritative precedents for corporate governance in America.
155 public companies with assets of more than $500 million filed for bankruptcy in Delaware between 2000 and 2011. This constitutes 38% of the nation’s total of 405 cases.
Since 2006, more than 90 public companies have sought protection from creditors in US Bankruptcy Court in Wilmington, where they are incorporated. The proposed bill would rule most of these companies out.
Other lawmakers supporting the bill are Howard Coble, the Republican representing North Carolina who chairs the House subcommittee on courts and Steve Cohen, the Democrat representative of Tennessee.
Samuel Gerdano, the executive chairman of the American Bankruptcy Institute made his thoughts clear when he said the bill “has no chance of passing in my opinion”.
Said Gerdano, “Delaware has many supporters within the bankruptcy community, including creditor interests and major banks who have come to rely on the predictability and reliability of practicing there.”
Retired federal judge Joseph J. Farnan Jr., who presided over bankruptcy cases in Wilmington, said the proposed bill may come from a desire of bankruptcy judges outside of Delaware to bring business to their areas.
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Filed under Chapter 7 (Tampa) by on Oct 18th, 2011. Comment.
