News of Payless Shoes filing chapter 11 bankruptcy hits Florida hard, with 50 stores being shuttered statewide, and putting hundreds of mostly low-wage people out of work.
Bankruptcy is a complex legal procedure and there are a number of different aspects to each different case. One of those aspects can be the so-called “stalking horse bid.” This type of strategy is an initial bid from an interested company on a bankrupt company’s assets. The bidder is chosen from a pool of candidates, and must perform their due diligence in placing their bid. There are a number of advantages and risks associated with this type of strategy. These types of bids typically occur during a Chapter 11 and can significantly reduce the amount of time that the bankrupt company will spend in court.
To understand just how bankruptcy can help with your credit, first you need to understand how long certain items stay on your credit report. For entries such as late payments, charge-offs, collections, tax liens, judgments, and foreclosures the magic number is seven. These items stay on your report a full seven years. Another troublesome thing is that “hard inquiries” remain visible for two years and can cause your score to dip for as much as six months. If you have enough of these entries, your credit score can be punched down from good or fair credit into bad credit. If you are living on the financial edge, it’s going to be reflected in your report, even if you are making payments.
There are people who think that bankruptcy is the worst fate ever. It’s not, and nobody gets to the point where they’re considering filing for bankruptcy without a lot of lost sleep. What bankruptcy is a way to either say, “I have nothing to pay off this debt with, or it’s ruining my life!” or “I have this debt but I can’t pay off all of it, or it will ruin my life!” or “My business has more debts than assets, but I think we could make it if I could pay some of the debt.” In this case, the options are Chapter 7 or Chapter 13 for individuals, and Chapter 11 for businesses.
Legal fees are a big source of mystery to most people, as very few have to deal with attorneys and legal matters on a regular basis. It can be confusing, as it’s one of those thing for which there can be a number of different answers for the same question.
Do I need to have an attorney to file bankruptcy?
"I’ve seen ads for bankruptcy preparers and paralegals, and DIY bankruptcy kits."
“I’m too broke to file for bankruptcy.”
You never want to get to this point, but I see so many people who need to file for personal bankruptcy who say this. They’re hopeless and resigned to a freight train of foreclosures, evictions, judgments, garnishments, bad credit problems, and endless harassment by collections agencies. Some try to handle it themselves, either by doing their own filing or using a bankruptcy preparer, but in doing this they often make mistakes or get bad advice that leads to the dismissal of the filing. Even a “simple” Chapter 7 is a complex legal procedure that takes place in the federal courts, and you need help.
Q: I’m considering filing for a Chapter 13 bankruptcy, but my biggest concern is what happens after I emerge from bankruptcy. How do I move forward with that much damage on my credit report? How do recover? I’m worried that my landlord could evict me even if I am current, and that I won’t have enough credit to get a decent place to live, or that I’ll end up having to move into the place where I have my office space in violation of my lease. Help?
I have to tell you that I hear this one all the time. In fact, it is possible to discharge some portion of federal, state, and local income taxes in your bankruptcy along with any penalties or interest that are attached. However, this is not a blanket statement.
A 341 hearing is also called a meeting of creditors. This takes place between you, the Trustee, and your creditors – if any of them show up. It’s a short meeting, but a very important one, and you will be asked about 20-25 questions about your financial situation. This type of meeting is consistent across all types of bankruptcies – Chapter 7, Chapter 11, and Chapter 13 being the most commonly filed types of bankruptcies. Ideally, you should attend with your attorney present, make any amendments to your case before this meeting, and make sure that the trustee is advised of any changes. In general, the meeting follows this type of format as provided by the Justice.gov website. Bankruptcies, as with all other legal proceedings, follow a set procedure and form.
About Chad Van Horn
Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn.