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Bankruptcy - An Overview

Mounting bills can put stress on any family's budget, but when there isn't enough income coming in to pay off those debts, late bill payments are inevitable. If you find yourself facing insurmountable debt and bankruptcy appears to be your only option, contactan experienced bankruptcy attorney to discuss your options.

At the law office of William F. Davis & Associates, P.C., our lawyers have been assisting business owners and consumers throughout New Mexico solve their debt challenges and get back on the path to financial success since 1984.

Act immediately to protect your assets if you are under the threat of repossession or suffering extreme creditor harassment. Learn more about how we can assist you in filing for:

Obtain a free initial consultation with an experienced bankruptcy attorney from our Albuquerque firm. Contact us now: 505-243-6129 or 800-675-6129.

Read more general legal information about bankruptcy below.

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Bankruptcy Attorney William F. Davis has owned a number of businesses and has extensive understanding of financial issues from a personal and professional standpoint. He is also one of only a few certified legal specialists the area of bankruptcy law in New Mexico. Contact us for a free initial consultation.

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If you are uncertain how to save your business or save your home, our experienced lawyers can help you get immediate relief and develop a realistic, workable plan to restructure your business or to discharge your debts, with the goal of getting you back on solid financial footing.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Bankruptcy - An Overview

Bankruptcy is a legal vehicle that provides relief to individuals and businesses in serious financial trouble. Generally, the bankruptcy process assesses the debtor's assets and liabilities and provides a structure within which the debtor is allowed to keep exempt property while attempting to satisfy as many eligible debts as possible (according to an order of priority established by law). Remaining eligible debts are discharged. Certain debts, like domestic support orders, debt obtained by fraud and most tax debt, are generally ineligible for consideration in a bankruptcy case.

The traditional stigma of bankruptcy has faded for the most part, and it has been replaced by the view that bankruptcy is a fresh start after a time of financial trouble. Many bankruptcy debtors have experienced unexpected and extreme financial shock that is out of their control, caused by sudden events such as job loss, business failure, death, divorce or illness.

In such cases, filing bankruptcy may be the right answer. If you are facing serious financial challenges, contact William F. Davis & Assoc., P.C. in Albuquerque, New Mexico, to schedule a consultation with an experienced bankruptcy attorney who can help you assess your legal options.

Bankruptcy laws are primarily federal, and bankruptcies are administered by the federal courts. However, the various states' consumer and commercial laws do play important roles in certain bankruptcy issues. In addition, each state has its own list of property exemptions.

Bankruptcy is an available option for individual consumers, businesses, farmers/fishermen and municipalities. There are two major bankruptcy types: liquidation and reorganization. For practical purposes, many debtors have so-called no-asset cases where all (or nearly all) of the debtors' property is exempt from the liquidation requirement and eligible debt is discharged without any property being sold.

Chapter 7

Chapter 7 of the Bankruptcy Code governs liquidation bankruptcy. Chapter 7 filings are available to both individuals and businesses. Upon the filing of a Chapter 7 bankruptcy petition, the bankruptcy court issues an "automatic stay" that stops most collection proceedings against the debtor. A bankruptcy trustee is responsible for gathering the debtor's nonexempt property, if any, liquidating it and distributing the proceeds to the creditors in order of legal preference, with secured creditors being paid before unsecured ones. If there are not enough assets to cover all the debtor's liabilities, then the creditors of lowest legal priority may only be partially paid, or may be unpaid altogether.

For an individual consumer debtor, these remaining debts are discharged and no longer the responsibility of the debtor. That being said, there are certain types of debt that will survive a bankruptcy proceeding. These include domestic support obligations like child support and alimony, most tax debts and many student loans. For a business debtor, the liquidated business generally does not survive the bankruptcy, as its assets have been sold and it is no longer profitable.

Reorganization

A reorganization bankruptcy is more appropriate where there is ongoing income that can be used to pay creditors, at least in part. Reorganizations are governed by several chapters of the Bankruptcy Code. Chapter 11 generally controls reorganizations for individual debtors with high debts or for business entities. Chapter 13, on the other hand, generally covers individual consumer debtors with lower debts. Farmers and fishermen can file for reorganization under Chapter 12, while municipalities seeking debt reorganization should seek assistance under Chapter 9.

As in a liquidation bankruptcy, filing for reorganization generates an automatic stay of most collection activity. The debtor then develops a plan to repay debts over a three- to five-year period through a bankruptcy trustee. At the successful conclusion of the payment plan, if certain conditions are met, remaining dischargeable debt is cancelled. If the debtor fails to make payments under the plan or fails to make alimony, child support or certain tax payments as well as his or her scheduled plan payments, the court may either dismiss the case or convert the reorganization to a liquidation proceeding.

Involuntary bankruptcy

In addition to bankruptcies filed voluntarily by debtors, creditors may have a legal remedy through "involuntary bankruptcy" petitions under Chapters 7 or 11. If either there is a minimum level of debt present or there are a minimum number of creditors, creditors can file a bankruptcy petition against a debtor (regardless of the debtor's wishes) to ensure that assets are distributed fairly among creditors through the bankruptcy process. Involuntary bankruptcy proceedings must be meritorious; penalties for filing improper or malicious petitions can be steep.

Speak to a bankruptcy lawyer

Bankruptcy law can benefit debtors and creditors alike, depending on the circumstances. If you feel that bankruptcy may be appropriate for your financial situation, contact William F. Davis & Assoc., P.C. in Albuquerque, New Mexico, to schedule a consultation with a skilled bankruptcy attorney.

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