DISTRESS SIGNALS THAT YOUR BUSINESS IS IN TROUBLE

As anyone who has ever started their own business will attest, there is a huge financial risk involved.  Typically, small business owners invest their own money, or they will seek a bank or SBA loan to provide start-up capital for the business.  On the other side of the risk involved, are the substantial rewards that many entrepreneurs seek when starting a new business.  They get to be in control of their work environment, set their own work/life balance and reap the financial rewards that often come from being able to manage their own company.

But what are small business owners supposed to do when revenues are down, and their expenses are going up from having to change their operations in the middle of a worldwide pandemic?  The key to survival during these difficult economic times, is being able to identify the signs of financial distress and to determine whether the company can manage its business without having to file bankruptcy.

CASH FLOW or LIQUIDITY

Obviously, if the company runs out of cash, then it will be difficult to continue to operate.  So, it is imperative for business owners to monitor their income statement to ensure that the company is operating in a positive cash position each month.  If cash flow is negative for a sustained period, it usually means that the owners or shareholders will have to invest more of their money or borrow on a line of credit to keep operating.

If a company is liquid, it has enough assets in cash to make payroll and pay immediate bills.  If a company is unsure if it will have enough cash to operate 30 days out, then that is one of the distress signals that may lead the owners to consider alternative measures to generate cash, such as liquidating inventory or factoring receivables.

DECLINE IN REVENUES

Poor sales growth could indicate a lack of consumer acceptance of the company’s product or services.  If sales are slow, then the company may be forced to sell its product or service at a loss to sustain its business.  Reviewing a profit and loss statement each month will show sales revenues and enable a company to chart whether sales are growing or declining.

POOR PROFIT MARGIN

Poor profits are usually the first sign that the business is not doing well.  If the profit margin is low or declining each month, then that means the business expenses are too high or the company’s sales are poor.  When a business struggles to earn profit, business owners will often have to ask themselves whether it is worth continuing to funnel more of their own money into the business just to make ends meet.  If a company is forced to raise money externally, it will raise its business risk and lower its creditworthiness with creditors, suppliers, investors, and banks, eventually limiting access to outside funding.

DEFAULTING ON PAYMENTS OR EXTENDING PAYMENTS

If a business is delinquent on payments or has to continually ask for more time to make payments, it hurts the company’s reputation and suppliers, or other critical vendors could force the company to change its payment terms to cash-on-delivery (COD).  Trying to do business on COD will put extra pressure on the company’s cash flow.

Also, if the company is having to extend longer payment terms to its customers for its receivables, the business will likely start to feel the cash crunch as well.  Customers who are paying slowly should be notified immediately, particularly when the company depends significantly upon one or two major customers.  In this situation, the risk of financial distress becomes even greater.

ADVERSE COMMUNICATION FROM BANK OR LENDER

Falling behind on payments with a secured lender or bank will usually result in diminishing the relationship and good will that the company developed when the loan was initiated.  The lender may ask for additional security or personal guarantees of related third parties when the company seeks additional funding.  Keeping open lines of communication is paramount to furthering the company’s banking relationship and enhancing its opportunities for additional financing during times of financial distress.  If the secured lender sends a notice of default, it usually means that communication has eroded, and the company will have to look for other avenues to bring the lender current.

EMPLOYEE TURNOVER

Changes in senior management and in employee turnover tend to be an early warning sign that a business is in trouble.  Each industry will have specific challenges, so business owners will need to monitor employee turnover to determine if the layoffs are tied to financial cutbacks or some other strategic reason.  The bottom line is that businesses in financial distress are rarely happy, which means employee moral may be low and upper management may be on edge and stressed about job performance.

If a significant division of the company decides to leave or join a competitor, the company will need to reassess its profitability and whether it can sustain the loss of key employees or find others who can step into their roles within the company.  Either way, employee turnover is a signal of financial distress.

CHANGES IN THE MARKET

Small businesses need to be watching for any downturn in the economy.  It is not always as easy to see as a worldwide pandemic.  But, losing a critical customer or a principal supplier can adversely affect company sales.  Any of these factors combined with the appearance of a strong competitor or an unexpected shift in consumer spending habits could put serious pressure on a company’s revenues and profitability.

SOLVENCY

One of the key measures of a company’s viability is its solvency.  A business is solvent if it has enough assets to cover its liabilities.  Solvency is measured with a business ratio called the “current ratio’ that compares current assets (receivables, supplies and inventory) to current liabilities (taxes, payroll and monthly debt service).  The “current ratio” is supposed to be 2:1, meaning the value of a company’s current assets should be twice as much as its current liabilities.  If a company can maintain this ratio, it can handle emergencies and pay its bills over a short period of time.  Failure to maintain this ratio will likely lead a company into financial distress.

While it may seem obvious to measure financial distress by a lack of cash to operate the business, many warning signs are present well before a company is forced to shut its doors. Once a company finds itself in financial distress, it should develop a proper course of action to address the issues at hand.

If you are struggling to pay your debts and concerned about the future welfare for you and your family, it is important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable.  Our attorneys have been assisting consumers and business owners with bankruptcy matters for over 25 years.  If you are considering filing for bankruptcy, please consider contacting the Nomberg Law Firm.  Our office number is 205-395-0532.

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Steven D. Altmann has been a lawyer for more than 25 years. Steve has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.

We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/distress-signals-that-your-business-is-in-trouble/

CAN I AVOID A JUDGMENT LIEN THROUGH BANKRUPTCY?

A LIEN is one of the more contentious and difficult concepts to understand in the world of Bankruptcy.

The legal term LIEN refers to a form of security interest granted over an item to ensure that the owner of that item pays their debt. The process of putting a lien on someone’s property (most often their house) can be done in several ways. The first way is where you take out a loan to purchase an item and you sign something saying that you agree that they have a security interest in the item. This is called a PURCHASE MONEY LIEN. A good example of this is a car title loan. The Bank lends you the money and in return, you agree to give them a lien on the title to the car. On the other hand, if you borrow money and give the lender the title to your car or pledge other assets of yours as collateral for the loan, you are giving them a NON-POSSESSORY NON-PURCHASE MONEY LIEN. This means, the lender has a lien in the property that you continue to possess, but the lender did not finance your purchase of this property.

Another way a creditor can get a lien on the property is by filing a lawsuit against you, obtaining a court order and recording it with the probate office of the county in which you reside. This is called a JUDGMENT LIEN. The fourth type of lien is called a STATUTORY LIEN. Some examples of a statutory lien are tax lien, mechanic’s or contractor’s lien, landlord’s lien or hospital lien. There are specific Federal or State statutes that govern how these liens are created and who can claim them to secure the payment of debt.

Bankruptcy law treats creditors who have liens differently than other creditors. Creditors who have a lien are “secured creditors”. In most cases, creditors’ liens are not affected by bankruptcy. In other words, the liens survive bankruptcy. So, if you have a home that is secured by a mortgage, you can bankrupt against the underlying promissory note and not pay anything else owed on the note. However, the mortgage still attaches to your house. So, if you don’t continue to make your mortgage payments, the mortgage lender can foreclose on the lien and take your property. The same thing goes for your car.

With most purchase money or consensual liens, you either want to keep the collateral or surrender it to the lender. If you surrender the property, then most likely, you will not owe anything else to the lender. If you want to keep the property, you will want to enter into a Reaffirmation Agreement with the lender saying that you will continue to make the contractual monthly payments and be responsible for the balance owed to them.

The contentious aspect of liens comes more into play with judgment liens. This is usually true because in most instances, you disputed the debt before it ultimately became a judgment. One of the most powerful tools of bankruptcy is that you have an opportunity to avoid judgment liens and keep them from attaching to your property.

 

HOW CAN I AVOID A JUDGMENT LIEN?

 

The keys to being able to avoid a judgment lien are knowing when the judgment lien was recorded and determining the value of the property to which the judgment lien would attach.  

To be effective against someone who files for bankruptcy, a judgment lien must be filed more than 90 days before the bankruptcy case was filed.  Judgment liens filed within 90 days before the bankruptcy is filed are subject to being avoided as to the full amount of the judgment regardless of the value of the property.

If the judgment is recorded more than 90 days before the bankruptcy was filed, you can file a Motion with the Bankruptcy Court asking the Court to avoid the judgment lien as to property that you own if the lien impairs your exemption in that property.  For example, let’s say someone has a judgment against you for $100,000 and you own a house in Alabama that is valued at $50,000.  If you can claim your homestead exemption of $15,500, this only leaves $34,500 of value in the property for the judgment lien to attach to.  So, you can bankrupt on the underlying debt and eliminate $65,500 from the value of the judgment lien against your home.  But, if you want to remove the judgment lien from your home, you will need to make arrangements to pay the creditor something to satisfy the balance of the judgment.           

The lien concept is a very complicated one.  It is important that you discuss these things with an experienced bankruptcy attorney who knows how to deal with liens in your bankruptcy case.

If you are struggling to pay your debts and concerned about the future welfare of you and your family, it is important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable. Our attorneys have been assisting consumers and business owners with bankruptcy matters for over 25 years. If you are considering filing for bankruptcy, please consider contacting the Nomberg Law Firm. Our office number is 205-395-0532.

 

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Steven D. Altmann has been a lawyer for more than 25 years. Steve has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.

We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/can-i-avoid-a-judgment-lien-through-bankruptcy/

ARE INJURED NFL PLAYERS ENTITLED TO WORKERS’ COMPENSATION BENEFITS?

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On any given Sunday, millions of American television screens are streaming an NFL football game. In the midst of all the cheering and adrenaline, the last thing on the minds of viewers is whether their favorite player gets workers’ compensation benefits if they are injured during the game. Yet, this likelihood is exactly what happened a few weeks ago to Dallas Cowboys’ quarterback Dak Prescott. In a horrific play, the QB suffered a compound fracture and dislocation of his right ankle, an injury that will put him on the sidelines for the duration of the season. To add insult to the injury, Prescott’s contract runs dry at the end of the season. So, if he hopes to earn another sizeable check come the 2021 season and maintain his starting status, Prescott will have to prove he’s healed his injury and capable of playing at his best.[2]

The long road back to recovery for Prescott includes surgery, doctor’s visits, and rehabilitation, a journey that might sound familiar to those who have been injured on the job. While the day-to-day activities of those that work the nine to five life might not seem to have much overlap with that of a professional athlete, when it comes to injuries, life is more similar than it would appear at first. Professional sports players make claims for workers’ compensation benefits and are bound by the same laws just like employees who work in manufacturing or retail. While some might argue that playing professional football comes with the risk of injury and, therefore, the players waive their right to be compensated for the inevitable injuries, professional football players are eligible for workers’ compensation benefits too.

For example, three players for the Cleveland Browns successfully pled their case for workers’ compensation benefits in Greco v. Cleveland Browns Football Co., LLC. The three football players were treated by two doctors hired by the team. Because the physicians acted as in-house doctors and were paid directly by the Browns, an employer-employee relationship was created between the Browns and the doctors, which meant that the players could file a claim for workers’ compensation beyond the two-year limit for filing a claim. As such, their claims were affirmed and deemed entitled to compensation.[3]

This entitlement does not mean that workers’ compensation insurance policies are shelling out millions of dollars to cover the injured player’s contract. Players are still bound by the laws of the state in which they play. This means that those that play and are injured in states like Illinois and Texas are capped at the same statutory amounts as employees, $55,971 annually in Illinois and $971 weekly in Texas. However, most workers’ compensation paid to the players ends up being a one-time, lump-sum payment, which, coincidentally, also precludes a player from suing the team once he accepts the payment.[4]

Whether you make millions of dollars as a professional football player or not, both NFL players and injured workers should obtain legal representation to make sure their injuries are fully compensated. We certainly wish Dak the best and hope that he makes a full recovery!

If you are hurt on the job due to unsafe working conditions, seek legal counsel, as you may be entitled to workers’ compensation or other benefits. As we have since 1967, we will continue to protect the legal rights of our clients – those who are hurt on the job while working for Alabama employers.  If you have been injured on the job and want to learn your rights, please consider contacting the Nomberg Law Firm. Our office number is 205-930-6900.

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Bernard D. Nomberg has been a lawyer for more than 20 years. Bernard has earned an AV rating from Martindale-Hubbell’s peer-review rating. In 2019, Bernard was named a Super Lawyer for the 7th year in a row.

[1] https://heavy.com/sports/2019/10/cowboys-dak-prescott-injury-fear-nfl-officials/

[2] https://www.cnn.com/2020/10/14/sport/dak-prescott-injury-contract-implications-spt-intl/index.html.

[3] https://www.businessinsurance.com/article/20201005/NEWS08/912337013/Cleveland-Browns-players-entitled-to-comp-for-injuries-NFL-Greco-v-Cleveland-Br.

[4] https://www.forbes.com/sites/legalnewsline/2018/03/20/life-after-the-chicago-bears-ex-players-have-collected-13m-in-workers-comp/?sh=1de2c752d97e; https://www.tdi.texas.gov/wc/employee/maxminbens.html.

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/are-injured-nfl-players-entitled-to-workers-compensation-benefits/

COMMON MISTAKES TO AVOID WHEN FILING A WORKERS’ COMPENSATION CLAIM

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If you have been injured on the job, the first thing on your to-do list is to report your injury followed by have your injury treated. The last thing on that list, and probably not even a thought to be put on your list at all, is ensuring you avoid the common pitfalls a fair percentage of workers’ compensation claims fall prey to. The world of accessing workers’ compensation benefits is not as straight forward as one would hope. There are deadlines, rules, and procedures that cannot be avoided or worked around in order to have a successful claim. While this article is by no means an exhaustive list, it is the injured employee’s guiding light to cast the spotlight on the four ways to avoid the most common mistakes incurred when beginning to file a workers’ compensation claim.

• Report your injury as soon as possible to your employer.

To even have a chance of obtaining benefits from a workers’ compensation claim, the most important thing you must do as an employee is to report the incident to your employer. In Alabama, you have five days after the incident occurs to report the accident to your employer.[2] You also have 90 days from the accident to report but it must be in writing if after 5 days. It is best to give notice as soon as possible.

Be truthful and fully disclose the events that led up to the accident and the extent of your injuries immediately following. By completely disclosing the truthful events of the incident, you will make your claims process easier because a representative of the employer’s workers’ compensation insurance company will not be able to deny your claim based on inconsistent facts if further investigation is conducted regarding the accident. The most efficient way to safeguard this disclosure of the accident is to submit the incident report in writing to your immediate supervisor and employer.

• Seek the treatment of approved healthcare providers.

Workers’ compensation was created to treat injuries incurred while on the job. While this is important for your own recovery, it is critical to the success of your claim. If you do not seek treatment from a doctor, you are dismissing your own claim. Further, while it is acceptable to see your own doctor, it is imperative to see a healthcare provider approved by your employer. It is the report of this employer-approved healthcare provider that will be used to support your claim for compensation. So, treat with a doctor-approved by your employer or the workers’ compensation carrier.

• Follow the instructions of your approved healthcare provider.

Following the instructions given to you by your approved healthcare provider includes attending the appointments to meet with your doctor, attending rehabilitation sessions, and adhering to the recovery plan created for your injury. Be on time and attend all appointments. Your doctor’s reports are included as supplemental records in your workers’ compensation claim. Failure to follow through with the recovery process created will be noted in your claims process and could result in the discontinuation of your benefits or dismissal of your claim.

• Reach out to/hire an experienced workers’ compensation lawyer.

While this might seem an obvious mistake to avoid, it is important to consider the timing in which you contact a lawyer. Seeking the advice of legal counsel soon after your injury, and before filing a claim, could mean the difference between having your claim approved and having to appeal a denial of your claim. Workers’ compensation can seem murky ground to tread for an employee that has never been injured on the job and is only now beginning to make his way through the maze of requirements to have a successful claim.

A workers’ compensation attorney is well-practiced in the art of guiding claims through the nuances required to get your benefits. An attorney is available to offer advice on what to say to investigators sent by the employer who wants to reduce the benefits the employer’s insurance policy will have to pay you, and the attorney will know how to obtain the most favorable outcome for your specific case, which may include a claim for compensation against a third party as well. The earlier you get an attorney involved, the earlier you will be able to have the help and advice of someone that knows the law and is looking out for you.

If you are hurt on the job due to unsafe working conditions, seek legal counsel, as you may be entitled to workers’ compensation or other benefits. As we have since 1967, we will continue to protect the legal rights of our clients – those who are hurt on the job while working for Alabama employers.  If you have been injured on the job and want to learn your rights, please consider contacting the Nomberg Law Firm. Our office number is 205-930-6900.

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Bernard D. Nomberg has been a lawyer for more than 20 years. Bernard has earned an AV rating from Martindale-Hubbell’s peer-review rating. In 2019, Bernard was named a Super Lawyer for the 7th year in a row.

 

[1] https://amtrustfinancial.com/blog/small-business/how-to-file-a-workers-compensation-claim.

[2] https://www.lawinfo.com/resources/workers-compensation/alabama/.

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/common-mistakes-to-avoid-when-filing-a-workers-compensation-claim/

WHAT QUESTIONS SHOULD I BE ASKING MY WORKERS’ COMPENSATION ATTORNEY?

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Suffering an injury while on the job can quickly turn into more stress than you ever anticipated. Suddenly you are swimming in a sea of paperwork with no sure end in sight. Each day holds another appointment with a doctor, another incident report, or another investigative interview with a lawsuit filed by your employer trying to flesh out details you would rather forget. Never mind the fact that you may already be in pain from the accident. The last thing any injured employee wants to add to the ordeal is more confusion and uncertainty. Having a work comp claim without the help of a lawyer will add stress to an already stressful situation.

It can be frustrating when the work comp adjuster does not call you back, does not answer your questions or does not approve medical treatment.  This is where an experienced work comp lawyer can help you.  Choosing a lawyer to help you manage your case and receive the benefits to which your injury entitles you should not be another source of stress. The best way an injured employee looking to find their way through the maze of workers’ compensation can make the most of their legal representation is to arm themselves with information. Be proactive in your workers’ compensation case and be prepared when meeting with an attorney. These seven questions for your lawyer are the best place to start.

• What is your level of experience with workers’ compensation? This might seem a fairly broad, or maybe even intrusive question, but asking this will give you an understanding of the attorney’s familiarity with workers’ compensation cases. Knowing an attorney’s comfortability with navigating this area of law will allow you to determine whether a particular lawyer will be the right fit for your case and if you can place your trust in them. Most important: hire a lawyer experienced with handling work comp cases! You would not want a dentist to operate on your back so make sure the lawyer you are hiring represents injured workers and does this type of work every day!
• Who will I be working directly with if your firm takes on my case? This is an important question to ask because it familiarizes you with the people in the firm that will be communicating with you most and who will be handling substantial portions of your case.
• How often do your cases settle versus go to trial? This may not seem important at the outset of your case, but it will become important if your case does eventually go to trial. The goal of every injured employer is to receive maximum compensation and medical benefits, so you want to be confident in your attorney’s ability to achieve your goal.
• What is the typical path for having a successful workers’ compensation claim? Not every workers’ compensation claim is the same but having a general knowledge of the process a case takes gives a sense of certainty in the midst of this uncertain time. It will also familiarize you with the amount of time individual steps on the process may take.
• What information should I share with my doctor? Be honest with your doctor. While the doctor is a “work comp doctor,” he/she is your doctor. The tradeoff with work comp in Alabama is that the employer chooses the initial treating doctor, but work comp also pays for the medical treatment including office visits, diagnostic tests, therapy, medicine and mileage reimbursement. An attorney will be able to shed light on what information is relevant to your case and should be conveyed to your doctor that you may have left out.
• What are the potential pitfalls of my case? Being aware of the potential for weaknesses in your case that could cause difficulty is the best way to prepare for them ahead of time. Your attorney will be able to provide insight into how these weaknesses may affect compensation.
• What do you need from me to be successful in my case? One of the most frustrating parts of any legal matter can be the unknown. Asking your attorney what your involvement in the case will be is the best practice for getting ahead of the uncertainty and being prepared to do what it takes to get your injury covered.

If you are hurt on the job due to unsafe working conditions, seek legal counsel, as you may be entitled to workers’ compensation or other benefits. As we have since 1967, we will continue to protect the legal rights of our clients – those who are hurt on the job while working for Alabama employers.  If you have been injured on the job and want to learn your rights, please consider contacting the Nomberg Law Firm. Our office number is 205-930-6900.

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Bernard D. Nomberg has been a lawyer for more than 20 years. Bernard has earned an AV rating from Martindale-Hubbell’s peer-review rating. In 2019, Bernard was named a Super Lawyer for the 7th year in a row.

 

[1] https://www.assuranceagency.com/blog-post/7-steps-to-effective-workers-comp-claims-management.

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/questions-to-ask-workers-compensation-attorney/

THE DISCHARGE ORDER – THE “HOLY GRAIL” OF BANKRUPTCY

The Holy Grail … King Arthur sought it (long before Monty Python) as did Indiana Jones in the Last Crusade.  The Holy Grail is a mythical artifact synonymous with a treasure that is sought by all who accept the quest before them.  In the Bankruptcy realm, the ‘treasure’ that you seek when you file a bankruptcy case is a Discharge Order.  A Discharge Order is the Bankruptcy Court’s way of giving you a fresh start, effectively telling you that you are done with your case, and you no longer owe most if not all of your unsecured debt.

Unsecured debts are debts such as credit card debt, payday loans, and medical bills.  They are “unsecured” because they don’t have anything to “secure” the debt, such as a house or car.   Mortgages on a house and car loans are discharged as well unless the debt is reaffirmed.  Debts that are not discharged usually include Domestic Support Obligations, like child support or alimony, most taxes and federally guaranteed student loans, and debts procured by fraud.

While it seems like a lot of debt is not discharged, the truth is that most people who file for bankruptcy don’t owe much in the way of debt that cannot be discharged.  Once you get your Discharge Order, you are not legally obligated to pay any of the unsecured debts that you owed at the time you filed, ever!  Even if you inadvertently failed to list a creditor.

Failure to list a creditor does not automatically render that debt non-dischargeable.  As long as the creditor has not suffered some sort of prejudice by not being able to file a claim or a complaint alleging fraud, the debt is still discharged.  If you file bankruptcy and realize a year or two later that you forgot to list someone, don’t panic.  Just notify the creditor of your bankruptcy case and then notify your bankruptcy attorney in case the creditor continues to harass you.  In most instances, the creditor will stop any further collections.  If the creditor has a basis for pursuing fraud or missed an opportunity to file a claim, then you may have to work something out with the creditor to avoid additional litigation.

The bottom line is that if you and your attorney do everything right, you should get a Discharge Order.    You need to follow all the rules in the Bankruptcy Code, complete a required Credit Counseling course and a Financial Management Course, and, most importantly, be honest.  You are required to disclose “list” every company or person you owe (“all creditors”) and everything you own (“all assets”).   The purpose of the bankruptcy laws is to allow the “honest but unfortunate” Debtor to get a fresh start.  If you don’t follow all of the rules or don’t disclose something, you could be denied a discharge. That is why it is so important to tell your attorney everything about your financial situation.  Even if you don’t think it is important.

While the Discharge Order maybe your “Holy Grail”, it may not necessarily be the end of the case.  If the trustee finds assets to sell, the trustee could continue to liquidate those assets and use the proceeds to pay a portion of your debts, even though you are relieved from your debts.  Most Debtors use exemptions to protect their assets, in which case, the trustee will file a no-asset report.  Therefore, most Chapter 7 Bankruptcy cases end with the Discharge Order.

When will I get my Discharge Order?

In a Chapter 7 case, an individual can get a Discharge Order within about 3 months of filing the case.  In a Chapter 13 case, an individual can get a Discharge Order after making all required plan payments pursuant to a plan confirmed by the bankruptcy court.  The Chapter 13 Discharge Order typically occurs 3 to 5 years after filing depending upon the length of the plan term.

Who can’t get a Discharge Order?

Corporations cannot get a Discharge Order in Chapter 7.  Corporations can only receive a discharge in a confirmed Chapter 11 plan that is substantially consummated.  Individuals who are found to have committed fraud by lying on their bankruptcy petition cannot get a Discharge Order.

Also, a person cannot file another Chapter 7 within 8 years of the bankruptcy filing that resulted in a Chapter 7 Discharge Order.  You can file a Chapter 13 after filing a Chapter 7, but you cannot obtain a Discharge Order in that Chapter 13 case if it is filed within 4 years of the prior Chapter 7 filing date.  So, it is extremely important that you tell your attorney about any and all prior bankruptcies that you may have filed before seeking to file another bankruptcy case.  The timing of your prior case will be crucial in determining whether and when you should file another case.

If you are struggling to pay your debts and concerned about the future welfare for you and your family, it is important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable.  Our attorneys have been assisting consumers and business owners with bankruptcy matters for over 25 years.  If you are considering filing for bankruptcy, please consider contacting the Nomberg Law Firm.  Our office number is 205-882-5005.

Steven D. Altmann has been a lawyer for more than 25 years. Steve has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.

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We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

 

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/the-discharge-order-the-holy-grail-of-bankruptcy/

EXEMPTIONS HELP PROTECT YOUR PROPERTY IN BANKRUPTCY

Exemptions are laws that the Bankruptcy Courts follow to determine what assets may be available to pay your creditors.  Which exemptions you use in your bankruptcy case vary depending on where you live and where you have lived for the past three years.

Alabama is an opt-out state, which means it does not use the Federal exemptions.  The State exemptions allow each individual to claim a homestead exemption on their residence up to $15,500.00 and up to $7,750.00 of personal property.  So, a married couple filing for bankruptcy who jointly own their home can claim as much as $31,000.00 of their equity exempt and as much as $15,500.00 of personal property, like cars, furniture, and money in the bank.

For most people seeking to file bankruptcy, those exemptions are more than enough to protect everything you own.  The whole concept behind filing for bankruptcy is to give someone a fresh start.  If they took everything you have, it would defeat the purpose of filing for bankruptcy.

In most cases, you can keep property over and above the value of your exemptions, but you need to have an accurate inventory of your property and discuss how this works with a bankruptcy lawyer before your case is filed.

Various forms of Individual Retirement Accounts and Life Insurance, for the most part, are 100% exempt from garnishment or levy from creditors, so they are usually 100% exempt from bankruptcy.  However, other retirement products, such as an Annuity, may not be fully exempt.

An Annuity is a contract between you and your insurance company in which you make a lump sum payment and then receive regular disbursements from the insurance company over time.  Under Alabama law, you can only exempt up to $250.00 per month.  So, if you have the right to withdraw the money from the insurance company, then everything over the $250.00 is subject to being garnished by your creditors.  If you are only entitled to $250.00 per month or less and nothing more, then the funds should be exempt in bankruptcy.

Again, it is very important that you speak with a bankruptcy attorney to review your assets and help you understand what is protected and what is not protected should you decide to file bankruptcy.  Knowing what is protected, may also help you decide whether you should consider filing Chapter 13 instead of Chapter 7.

In Chapter 7, your assets are reviewed by a Chapter 7 trustee to determine what is exempt and what can be sold to pay your creditors.  If you have a property with too much equity and you are concerned about losing it, you may have to consider other alternatives to bankruptcy or possibly file Chapter 13.

In Chapter 13, you propose a plan to repay your creditors over time, usually anywhere from 36 to 60 months.  How much you must pay your creditors depends on your disposable income, but it also depends on the value of your non-exempt assets.  Creditors must receive as much as they would receive in a Chapter 7.  This is also known as the “Best Interest of Creditors Test”.  So, if you have a property that is not exempt and subject to being sold by a Chapter 7 trustee, you must propose a plan that pays your creditors an amount that is at least equal to the value of this property.  If you can claim the property exempt, then that property will not be included in your plan payment calculation.

Whether you are considering filing Chapter 7 or need a Chapter 13 instead, please talk with an experienced bankruptcy lawyer before you file.

If you are struggling to pay your debts and concerned about the future welfare for you and your family, it is important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable.  Our attorneys have been assisting consumers and business owners with bankruptcy matters for over 25 years.  If you are considering filing for bankruptcy, please consider contacting the Nomberg Law Firm.  Our office number is 205-882-5005.

Steven D. Altmann has been a lawyer for more than 25 years. Steve has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.

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We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

 

from The Nomberg Law Firm – Birmingham Workers' Compensation & Personal Injury Lawyers https://www.nomberglaw.com/blog/bankrupcty/exemptions-help-protect-property-in-bankruptcy/