Bankruptcy 101 By the Law Offices of Tyler, Bartl, Ramsdell & Counts, P.L.C.                       Copyright 2012
Bankruptcy OverviewGoals of Bankruptcy 101• Explain facts and concepts related to Bankruptcy in everyday  language.• Infor...
Misconceptions about     BankruptcyCommon Misconceptions:•Bankruptcy is a negative thing.•Debtors and creditors do not wan...
What is Insolvency?                            • To declare a state of complete inability toInsolvency Defined            ...
Insolvency ExploredQualifications for Legal Insolvency: • Be unable to pay debs with current balance • Be Unable to pay de...
What is Bankruptcy?Bankruptcy              • The legal status or declaration of a person                          or compa...
Bankruptcy ExploredQualifications for Bankruptcy:• Must be legally established to receive protection and  cooperation from...
Types of Bankruptcy               Summarized           • Involves liquidation of assets.Chapter     • Available to individ...
Chapter 7 - Basics   Filing Fee: $306   Requires: Liquidation of the owner or individual’s assets.   Proceedings: A truste...
Chapter 13 - Basics   Filing Fee: $281   Requires: Individuals retain all property in exchange for making payments   from ...
Chapter 11 - Basics    Filing Fee: $1,046    Requires: Debtor remains in possession of its own property and runs its    bu...
Importance of the Automatic           Stay An Automatic Stay • Is awarded under filing any chapter of bankruptcy. • Prohib...
Avoidance Actions By The     Trustee or DIP Avoidance Actions to Generate Income and Pay Creditors                  may be...
How Protect Yourself In    Bankruptcy Ways to Guard Against Harassing Creditors •Attend creditor’s meetings to ask questio...
Free Consultation• General information on bankruptcy provides you with  knowledge, but knowledge does not provide you with...
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A Guide to Bankruptcy Facts, Misconceptions and Tips to Protect Yourself

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This PowerPoint is a summary of our E-Book "Bankruptcy 101" and covers important topics such as common misconceptions about bankruptcy, legal definitions of bankruptcy and insolvency, and takes a close up look at the differences between Chapter 7, 11 and 13. Also included is a special section on how to protect yourself in bankruptcy. Brought to you by the attorneys at TBRC Law in Alexandria, Virginia www.tbrclaw.com.

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  • When it comes to bankruptcy there are a lot of misunderstandings. The main benefit of bankruptcy is that it essentially allows you a do-over in the game of life. You just need to recognize that it is a dark mark that will follow you and your financial life for the next several years. It isn't something to do lightly. http://www.amiller.ca/bankruptcy.html
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A Guide to Bankruptcy Facts, Misconceptions and Tips to Protect Yourself

  1. 1. Bankruptcy 101 By the Law Offices of Tyler, Bartl, Ramsdell & Counts, P.L.C. Copyright 2012
  2. 2. Bankruptcy OverviewGoals of Bankruptcy 101• Explain facts and concepts related to Bankruptcy in everyday language.• Inform of legal proceedings in bankruptcy.• Differentiate between forms of Bankruptcy.Bankruptcy Discussion Points• Define Insolvency.• Clarify the term Bankruptcy.• Explain different levels of bankruptcy.• Importance of the Automatic Stay.• Avoidance Actions By The Trustee.• How Protect Yourself In Bankruptcy.
  3. 3. Misconceptions about BankruptcyCommon Misconceptions:•Bankruptcy is a negative thing.•Debtors and creditors do not want to help.•Bankruptcy is the solution to debt problems.•Filing bankruptcy resolves all debt.•Bankruptcy and insolvency are the same.
  4. 4. What is Insolvency? • To declare a state of complete inability toInsolvency Defined pay debt. (classified as balance sheet or cash flow insolvency) • Who – A company or person. Balance Sheet • What – Liabilities are greater than the assets or Insolvency properties owned. Cash Flow insolvency • Who – Person. • What – Unable to pay debts as they are due.(Equity Insolvency) May Result Cash Flow Insolvency In Balance sheet Insolvency If a business ceases conducting business because it is unable to pay bills.
  5. 5. Insolvency ExploredQualifications for Legal Insolvency: • Be unable to pay debs with current balance • Be Unable to pay debt due to a lack of cash flow • Be able to show assets are less than the amount of liabilitiesReasons for Filing: • Unable to pay back lenders on time • Decrease in cash flow • Income is insufficient to cover expensesBenefits of Filing: • Government and debtors work towards a resolution • Financial and organization structures are remodeled (not available in all countries) • Business may continue operating under a “declared protective arrangement”
  6. 6. What is Bankruptcy?Bankruptcy • The legal status or declaration of a person or company that has been declared Defined insolvent – unable to repay debts owed • Who – A person or company • What – A legal status referring to the entire About process of the inability to pay off debtsBankruptcy (Often imposed by the court not declared by individuals) • Different types of bankruptcy filings are available * Some types of bankruptcy are not available to all individuals Chapter 7 Chapter 9 Chapter 11 Chapter 12 Chapter 13
  7. 7. Bankruptcy ExploredQualifications for Bankruptcy:• Must be legally established to receive protection and cooperation from others.• Must legally prove a financial situations exists.Reasons for Filing:• Avoid the piece meal liquidation.• Fairly and equitably distribute assets among creditors.• Companies – Reorganize business debts, leases, etc. and continue business.• Individual – Provide a fresh start from preexisting indebtednessBenefits of Filing:
  8. 8. Types of Bankruptcy Summarized • Involves liquidation of assets.Chapter • Available to individuals or Companies. 7Chapter • Debtor must be a municipality to qualify. • Special Filing – Not available to most individuals or companies. 9 • Debtor’s debt exceeds limit of Chapter 13 or lacks regular income.Chapter • Available to individuals or companies but is most commonly used by Businesses. 11 • Debtor must be a family farmer.Chapter • Special Filing – Not available to most individuals or companies. 12 • Involves a payment plan from disposable incomes.Chapter • Available to individuals. 13
  9. 9. Chapter 7 - Basics Filing Fee: $306 Requires: Liquidation of the owner or individual’s assets. Proceedings: A trustee is appointed to oversee and administer the estate and collect, recover, and distribute assets according to rules of bankruptcy code. Offers Companies: Priority to IRS to lessen personal tax liabilities. Offers Individuals: Allows Individual debtor to give up nonexempt assets in exchange for discharge of all dischargeable debts.
  10. 10. Chapter 13 - Basics Filing Fee: $281 Requires: Individuals retain all property in exchange for making payments from disposable income to a trustee for 3-5 years. Proceedings: Payments are made to a Chapter 13 Trustee who distributes payments to debtors according to the Chapter 13 plan approved by the Bankruptcy Court. Offers Individuals: Allows Individual debtor broader discharge options for taxes at the completion of payments.
  11. 11. Chapter 11 - Basics Filing Fee: $1,046 Requires: Debtor remains in possession of its own property and runs its business in the ordinary course following the rules of the Bankruptcy Code and Bankruptcy Court. * Also known as a Debtor-in-possession (“DIP”). Proceedings: The DIP can liquidate assets and pursue voidable transfers if desired and a payment plan is established in which: - Creditors claims are categorized into classes. - Creditors need not receive 100 cents on the dollar. Offers Individuals: Debtor receives a discharge from prepetition obligations upon completion of the plan. Offers Companies: Ability to reject leases for unprofitable locations and maintain leases for its profitable locations. * Offers specialized rules for “small business debtors” and “single asset real estate.”
  12. 12. Importance of the Automatic Stay An Automatic Stay • Is awarded under filing any chapter of bankruptcy. • Prohibits creditors from harassing a debtor during the period of the bankruptcy case. An Automatic Stay Protects Against • Lawsuits, • Foreclosures, and • Any collection actions against the debtor. Benefits of Automatic Stay • Violating creditors will be held in contempt of the Bankruptcy Court and are subject to damages. • Awards a “do not harass” card until legalities are squared away such as: • Repossessing a vehicle or possessions and/or • Garnishing bank accounts.
  13. 13. Avoidance Actions By The Trustee or DIP Avoidance Actions to Generate Income and Pay Creditors may be classified as: Fraudulent Failure to Statute of PreferencesConveyances Perfect Limitations Items used as Any payment collateral to Transferring made to a secure creditors Avoidingassets to another creditor 90 days claims may be transfers prior individual to prior to filing the voided unless to, on or after avoid using claim must be “perfected” bankruptcy case assets to pay returned and Perfected means a filed is closed or creditors evenly finance statement dismissed notifying others they distributed have claimed a particular asset
  14. 14. How Protect Yourself In Bankruptcy Ways to Guard Against Harassing Creditors •Attend creditor’s meetings to ask questions. •Take the debtor’s deposition under F.R. Bankr. P. 2004. •File a timely proof of claim. •Enter an appearance in the case by filing a Notice Of Appearance. •Seek relief using the Automatic Stay. •Investigate Payment of Administrative Claim. •Seek dismissal of a case. •Object to the debtor’s discharge or dischargeability of the debt owed. Protection Within Specific Claims •Declare intention to surrender or retain a secured creditor’s collateral (Chapter 7). •Review Chapter 11 DIP’s monthly reports filed with the Bankruptcy Court. •Seek appointment of a Trustee (Chapter 11). •Ensure debtor has properly valued collateral (Chapter 11 and 13). •Ensure claim is properly treated (Chapter 11 and 13).
  15. 15. Free Consultation• General information on bankruptcy provides you with knowledge, but knowledge does not provide you with a personalized solution to debt problems.• We have been serving creditors and trustees alike in the Northern Virginia community since 1986.• Our experienced law firm provides assistance with all types of bankruptcy fillings.• If you have questions about bankruptcy call for a free consultation (703) 549-5000 or visit us online at www.TBRCLaw.com Schedule a Free Consultation Today
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