Bankruptcy Law:
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What is bankruptcy?
Bankruptcy allows one to either obtain a fresh start free from debt or re-organize and pay off certain debts and discharge other debts.
Chapter 7 bankruptcy
allows a person to claim certain property as exempt property and discharge
debts that exceed his ability to pay. In
Chapter 13 bankruptcy is known as a wage earners plan and allows a worker to make payments for up to 60 months through the Bankruptcy Trustee. The Trustee, and Bankruptcy law determine the fair distribution of property to creditors. There are several types of personal bankruptcy, with two main types. There is Chapter 7 liquidation and Chapter 13 reorganization. The Chapter 7 bankruptcy liquidation is designed primarily for the individual whose assets and property are exempt from execution. Chapter 7 bankruptcy is used often to eliminate credit card debt, medical bills and other unsecured debt. In those cases the debtor will not be required to repay any of their unsecured debts. This process takes all physical property that is not exempt and converts it to cash and then pays the proceeds to the creditors. Once all notice to creditors and the bankruptcy law is complied with the debtor may be discharged from his debts. A Chapter 13 reorganization attempts to repay the creditors through a Chapter 13 plan over 60 months or less. A Chapter 11 may be used when a business goes into bankruptcy proceedings. You should consult with an Alabama Bankruptcy attorney or your family lawyer to determine if bankruptcy is a viable option.
The information contained in this message is general in nature and should not substitute for the advice and counsel of a licensed bankruptcy attorney.
The Law Firm of MITCHELL HOWIE provides free bankruptcy consultations
in
Costs and Benefits of Bankruptcy
A Chapter 7 bankruptcy filing will remain on your credit report for 10 years and therefore it may effect your ability to get credit in the future. However, judgments, foreclosures and repossessions may also remain on your credit record until they are paid in full. In other words, if you cannot or do not pay a judgment it will be of record for at least 10 years. Credit card accounts past due over 90 days may show up on your credit report for up to 7 years.
The first benefit of a bankruptcy is that as soon as one is properly filed an automatic stay is issued by the federal bankruptcy court that prohibits anyone fro trying to collect from you without going through the bankruptcy court and your attorney. You will not get any more harassing telephone calls or letters.
The second benefit is that your unsecured debts will be discharged------ you will not be required to pay credit cards and medical bills that you had when you filed the Chapter 7 bankruptcy.
The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
The Law Firm of MITCHELL HOWIE provides free bankruptcy consultations
with an
Bankruptcy Filing Fees
The Bankruptcy Court charges a
filing fee and an attorney also charges a fee for his work in representing you.
It is not for free. Therefore, the courts will charge a filing fee. This will
be ($209) two
hundred and nine dollars for a
Chapter 7 bankruptcy in
For contested bankruptcies or special and extra hearings most attorneys charge by the hour for their time and may add office expenses such as copying.
The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
The Law Firm of MITCHELL HOWIE provides free bankruptcy consultations
with a licensed
How to File Bankruptcy
Bankruptcy was designed to help a person in debt to get a fresh start. If it were not for bankruptcy most people
would spend their lives working to pay off the banks and other creditors
without any hope of realizing the American dream of home ownership and
retirement. The process is governed by federal and state law and decisions are
made in federal bankruptcy court. There are five types of bankruptcy, but for
most people filing for personal bankruptcy, there is Chapter 7 and Chapter 13.
With a Chapter 7 bankruptcy or liquidation, your non-exempt assets are taken
and sold with the proceeds given to your creditors. If you fit within the
If you file for Chapter 13 bankruptcy, a trustee is named to oversee your
case. You present a payment plan and if it is acceptable to your creditors and
the trustee it is confirmed by the bankruptcy court and all debt collections
against you stop. The major difference is that with Chapter 13 you get to keep assets that may
not be exempt, but you are required to pay your creditors at least the same as
you would if you filed under Chapter 7.
So if your debts are too large to fit into a reasonable budget, then you may
need to file a Chapter 7 bankruptcy. But if you think you could repay part or
all that you owe, then you may be advised to file a
Chapter 13 bankruptcy, which may look better on your credit report because it
shows you attempted to pay off what you owed.
Once the determination is made what type of bankruptcy you need you or
your attorney will file a petition with the U.S. Bankruptcy court, which will
want a list of your creditors. An
This is for information purposes only and is not intended to substitute for the advise and counsel of a licensed attorney. It is recommended that you consult with an attorney.
The Law Firm of MITCHELL HOWIE provides free initial bankruptcy
consultations in
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.
How to Retain
an
Finding a lawyer to handle a bankruptcy is not difficult, if you are filing a simple Chapter 7 liquidation bankruptcy. Most attorneys listed in your local directory will be able to handle that with little problem. If you do not know what type of bankruptcy you wish to file, then you need to seek the advice of an attorney who has handled the different types of bankruptcy cases. But beware of an attorney who recommends a more expensive Chapter 13 without fully explaining your options and what a Chapter 13 bankruptcy entails. To find a bankruptcy attorney, you may consult with friends and family. Ask them if they can make a recommendation. You can also go to the Alabama Lawyer Referral and ask for a recommendation. You should find an attorney with whom you feel comfortable and who meets with you personally An attorney who has you meet with an assistant or paralegal may be difficult to get in touch with if you need him. If you are paying an attorney you should be entitled to meet with him first. Good communication is important in an attorney-client relationship and aids in the successful completion of a bankruptcy filing. The attorney should be able to answer your questions and give you enough information to help you understand the bankruptcy laws and how they will effect you. If you feel that it is difficult to get in touch with your attorney, then seek another attorney. You are the client and an attorney is responsible for looking after your best interest. remember that. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
This is for information purposes only and is not intended to substitute for the advice and counsel of a licensed attorney. It is recommended that you consult with an attorney.
The Law Firm of MITCHELL HOWIE provides free initial bankruptcy consultations with an Alabama Attorney licensed to practice Bankruptcy in the Northern District of Alabama. The office is located in Downtown Huntsville, Alabama. Call (256) 533-2400 for your free bankruptcy consultation
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.
Bankruptcy and Marital Property
Should both spouses file for bankruptcy if one is in financial trouble? It depends upon who incurred the debt and the amount of the debt. If only one spouse has incurred the debt and the other is not liable on it it may be possible to file only for the husband or the wife. Usually both spouses file and get a fresh start because the costs and fees are the same for a married couple as for a single person and the debts are often in both their names. However, just because you are married to someone it does not make you responsible for their debts----you would have had to sign an agreement , saying you would pay your spouse’s debt.
Any non-exempt property bought jointly, will be available to creditors no matter which spouse files. Bankruptcy of a married individual can have unforeseen consequences and should be carefully considered and reviewed by a lawyer. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
This is for information purposes only and is not intended to substitute for the advice and counsel of a licensed attorney. It is recommended that you consult with an attorney.
The Law Firm of MITCHELL HOWIE provides free initial bankruptcy
consultations with a licensed bankruptcy attorney in
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.
Liquidation vs. Debt Reorganization
There are two basic types of bankruptcy, the liquidation and the
reorganization. The liquidation is called Chapter 7. A Chapter 7 liquidation is
used by individuals whose home and property are exempt from execution or whose debts are so high that a
repayment plan cannot be worked out. If
there is real estate involved and the payments are current it may be reaffirmed
and it may be kept. The same would go
for other assets that are being paid for such as a car or truck. The Chapter 11 bankruptcy is used by
businesses for reorganization of their debts. They make a plan or budget
showing how much they will pay on their debt and to whom. Chapter 12 bankruptcy
is a reorganization designed to help the family farmer keep the farm. The
farmer must file a plan or budget with a trustee showing how he will repay his
creditors and make the payments. The Chapter 13 bankruptcy is a reorganization
designed for the individual or wage earner.
The person is required to have a job or other regular income. The
bankruptcy court stays all attempts to foreclose and collect on debts while the
debtor makes
payment according to a plan approved by
the court for up to 60 months. This is used when people who have over $10,000
equity in their homes are trying to avoid losing their homes. The information
contained in this message is general and should not substitute for the advice
and counsel of a licensed
This is for information purposes only and is not intended to substitute for
the advice and counsel of a licensed bankruptcy attorney. It is recommended that you consult with an
The Law Firm of MITCHELL HOWIE provides free initial bankruptcy
consultations with an
No representation is made that the quality of legal services to be performed
is greater than the quality of legal services performed by other
Chapter 7 and 13 Trustees
The bankruptcy trustee is who you will be handling the “Bankruptcy Estate” in bankruptcy. This
court appointed representative makes sure that all assets and property have
been declared and that the r exemptions of property are proper and legal. You attorney if you hire one will make sure
that all the information necessary to the completion of a bankruptcy is properly prepared
and in order. The trustee will also look after the interests of the creditors.
In Chapter 7 Bankruptcy, the trustee may oversee the sale of non-exempt assets
and the distribution of the proceeds to the creditors. In Chapter 13
Bankruptcy, the trustee looks over your repayment plan and makes sure that the
plan is workable and fair to you and your creditors. The trustee will look at
the plan to make sure it has enough budgeted to support yourself and your family as
well as make the required payments to your creditors. Each trustee may ask different questions
and have different requirements.. The information contained in this message is
general and should not substitute for the advice and counsel of a licensed bankruptcy
attorney in
This is for information purposes only and is not intended to substitute for the advice and counsel of a licensed attorney. It is recommended that you consult with a bankruptcy attorney in your state.
The Attorneys at the law firm of MITCHELL HOWIE provide free initial bankruptcy consultations
with a bankruptcy attorney in
No representation is made that the quality of legal services to be performed
is greater than the quality of legal services performed by other
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as Liquidation. In a Chapter 7 bankruptcy all non-exempt property is liquidated. Chapter 7 bankrutcy allows unsecured debt to be discharged, however, you can choose to repay or reaffirm a debt. . This type of bankruptcy is used mostly by people who have no way of repaying their debt and have little property. The process is simple if you hire a bankruptcy attorney. You file for bankruptcy protection. The court issues a stay which stops all attempts at collection, including seizure of property. A trustee is appointed, you submit a complete list of your creditors and they are notified of your intent. At this point the trustee will liquidate all of your non-exempt assets and distribute the money to your creditor. After the distribution, you will not be required to attend a hearing again, but your debts will be discharged by a federal bankruptcy court. You are no longer under any obligation to your creditors. However, if you then manage somehow to buy something on credit within seven years of filing for bankruptcy, you will be required to pay that creditor. You cannot file for bankruptcy again for some time. The information contained in this message is general and should not substitute for the advice and counsel of a licensed bankruptcy attorney.
The law firm of Mitchell Howie provides for a free consultation with
a licensed
Should you file Chapter 7?
Should you file for Chapter 7 bankruptcy? Chapter 7 bankruptcy is liquidation of all of your assets in an attempt to repay your creditors. For people who have substantial property and an income, this type of liquidation may not be in their best interests. If you are considering bankruptcy for a business, you will not be allowed to file for Chapter 7, it can only be used by the individual. If you have no real estate or other tangible assets which you would wish to keep, Chapter 7 Bankruptcy may be the way to go. Though in some states, you may be able to keep your home if you file Chapter 7. The more complex your holdings, the more likely that Chapter 7 Bankruptcy is the wrong type of bankruptcy for you. The information contained in this message is general and should not substitute for the advice and counsel of a licensed bankruptcy attorney
The Law Firm of Mitchell Howie
offers free initial consultations for bankruptcy and personal injury. Call now for an appointment with a licensed
Chapter 7 Procedures
The first step in a Chapter 7 bankruptcy if filing the
position. When you file with the
Non-Dischargable Debts
The Chapter Seven bankruptcy is by no means a total discharge of your obligations. You must pay any debt which the government has deemed to be outside of the protection afforded under Chapter 7 Bankruptcy. This includes child support, alimony and certain taxes. If you file bankruptcy within three months of going on a spending spree, then any luxury items purchased on credit, may have to be paid for in full. This can include furs, boats, motor vehicles and art. You will have to repay most student loan debt that is guaranteed by the Federal student loan program. Any debts incurred by fraudulent means, must be repaid as well. If you are sued and found to have been willfully negligent or driving while intoxicated, you will have to pay the damages. If you have been ordered by another court to pay punitive damages, you may have to continue paying. In short, the Chapter 7 bankruptcy may not discharge everything you may owe. A person should consult with a bankruptcy attorney to advise him in these matters. The information contained in this message is general and should not substitute for the advice and counsel of a licensed bankruptcy attorney.
Chapter 11 Bankruptcy
Chapter eleven bankruptcy is often called a business reorganization and is used by corporations and small business owners in order to reorganize their debt. For those people who have assets which exceed the limits of Chapter 7, a Chapter 11 bankruptcy is usually the best path. The business reorganization is often used by cash strapped businesses which feel that by keeping the creditors at bay, they can recover and become a viable business once again. The court appointed trustee must approve your business plan. Once it is approved you may return to normal operations. This may prove difficult as vendors may be reluctant to sell you the goods you need to operate on anything other than a cash basis. If you do successfully fulfill your reorganization plan, your debts will be discharged. If you fail to follow your plan, the business will be liquidated. The information contained in this message is general and should not substitute for the advice and counsel of a licensed bankruptcy attorney.
Should you file Chapter 11?
The advantages and disadvantages of chapter 11 bankruptcy are much like those you would experience filing as an individual. The big advantage to filing chapter 11 is being able to hold off your creditors from further attempts to collect debts. This means that all lawsuits against you are put on hold. You can then create a plan to reorganize the business and attempt to stay afloat. After your business plan has been approved by the bankruptcy trustee and the creditors, then you may continue business. The disadvantages are those you would expect anytime you declare bankruptcy. Your credit is ruined. Vendors who had let you run up debt, will most likely ask for payment in cash. Some vendors may not deal with you at all. It is very difficult to restore a business if your cash flow was such that you had to file and can no longer pay your vendors. It is important to evaluate thoroughly the consequences of filing for bankruptcy. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Chapter 11 Procedures
The first step in filing Chapter 11 is petitioning the court for protection from your creditors. The court then issues a stay to prevent further collection attempts. The court will then appoint a trustee to administer and referee. The business will be required to provide a complete accounting of all the businesses' assets and liabilities. This will include any cash flow. A reorganization plan must be created that indicates how the company will be run in the future. The plan must indicate how much is to be repaid to each of the creditors and the schedule of payments. If the trustee finds the plan to be fair, the creditors will meet to discuss the plan. If there are no objections, the plan is implemented. The company continues to operate and strives to meet its obligations under the plan. If the plan is fulfilled, the debts are discharged, usually after three to five years. If the plan fails, the business may be liquidated. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy was designed to help out the American family farmer. Because of the unique needs of the farmer, a Chapter 11 or Chapter 13 bankruptcy, just didn't fit the special circumstances. The Chapter 12 allows the farmer to attempt to regain control of the farm and, hopefully, continue the tradition. Most farm debt is related to real estate debt. In order to keep this real estate, which would ordinarily be under lien, the farmer must pledge a part of the profits from future crops towards the payment of debt. The farmer must also pay creditors an amount equivalent to the fair market rent. The farmer must be acting in good faith in order to be allowed this form of bankruptcy. Like other reorganizations, the farmer must submit a complete list of assets and liabilities and a statement of financial affairs. If the farmer successfully repays their debt, they may keep the farm. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Should you file Chapter 12?
The advantages and disadvantages are all clear when it comes to the Chapter 12 bankruptcy. The farmer must retain the land. In other forms of bankruptcy, any land which is mortgaged in order to buy seed or fertilizer, is subject to seizure. The chapter 12 bankruptcy protects the farmer from this type of seizure. The land remains in the farmer's hands and is farmed as usual as long as part of the profits go towards paying debts. For farmers caught in a bad year, this type of reorganization often works just fine. The disadvantages are actually few for the farmer. The only disadvantage would be the requirement that part of the profit goes towards paying the debts. Because the farmer must often borrow to pay for the next crop, the cycle may be downward. Be sure to examine your financial situation carefully before going into bankruptcy. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Chapter 12 Procedures
The first step in filing a chapter 12 bankruptcy is the filing of a petition with the United States Bankruptcy Court asking for protection. The court will then issue a stay that prevents creditors from continuing collection procedures, including lawsuits. The court will appoint the farmer as trustee to oversee the process and to insure that everyone, creditors included, get a fair deal. The court will require a complete list of creditors, an accounting of assets and liabilities and a Statement of Financial Affairs. The farmer must then develop a plan within ninety days to repay debts. Once a suitable plan has been developed, the farmer may continue to operate the farm. If the crops are successful and payments are made to alleviate the debt, the farmer gets to keep the land and continue farming. If unable to complete the plan, the farm will then go into liquidation. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Chapter 13 Bankruptcy
The wage earner repayment plan or the adjustment of debts of an individual with regular income, as it is now known, is also called a Chapter 13. This type of bankruptcy is useful for those people who either do not want the stigma of a Chapter 7 liquidation or who have property to protect and a steady income from which they can make payments. This individual reorganization requires the petitioner to create a repayment plan that attempts to repay the creditors some percentage of what they are owed. If the trustee approves the plan, it is submitted to the creditors who may object or approve. Eventually a plan will be worked out and payments will commence. Upon the successful completion of the plan, the bankruptcy is discharged. The debtor need not worry about ever being contacted by the creditors again. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Chapter 13 Procedures
The first step in a Chapter 13 bankruptcy is filing the petition. When you
file with the
Protecting Your Home From Creditors
Can you keep your home, is one of the most frequently asked questions when
faced with a bankruptcy. While the home loan is technically a secured loan with
the house itself serving as collateral, many states have passed laws that
protect the house in a bankruptcy. This protection ranges from absolute, which
is pretty much the case in
Protecting Your Vehicles from Creditors
There are certain assets which state and federal law have determined to be exempt from the reach of creditors, and this may include your car or truck. If you own your vehicle outright, then, according to federal law, if it is valued at less than twelve hundred dollars, it is exempt. Your state may have different laws governing the exemption for cars and trucks. Some states exempt any vehicle that is necessary for transportation to and from work or which is used as part of that person's livelihood. Other states have higher exempt values than the federal government, others less. If your vehicle is still being paid for, the lien holder can repossess the vehicle. You can retain possession of the vehicle if you make good on the past due payments and reaffirm the debt. This means you promise to continue paying for the vehicle. The lien holder, does not have to accept this solution. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Secured vs. Unsecured Debts
When you file for bankruptcy you may have two types of debt, secured and unsecured. Secured debt is debt which you obtained by pledging some tangible property of value as collateral. This could be a cash loan with your home serving as collateral. You could be purchasing a home from a bank, which then holds the lien on your home until you repay your loan. A car, on which you are making payments, is another example of a secured loan. If you file for bankruptcy, the lien holders will be able to repossess the collateral. How much, if any, of your home's equity is subject to foreclosure depends upon the laws of your state. Unsecured debt is any debt that has no collateral backing the loan. Credit card debt is a prime example. Signature loans are another. Unsecured creditors can usually expect to get little if anything in a bankruptcy. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Exempt Property in Bankruptcy
Exempt property is any property which the law, either state or federal, determines to be out of the reach of creditors. The federal law has a list of exempt property which includes. $7,500 for a homestead, a motor vehicle valued at less than $1,200, a $200 limit on each personal item up to a total of $4,000 dollars for the entire family and a $750 limit on tools and professional books. Your state's laws may have more or less favorable exemptions and you may be able to choose between the state's and the Federal Government's exemptions. Some states will require that you use their list of exemptions. Certain government benefits are also exempt, including future benefits like social security, unemployment benefits and veteran's benefits. Child support payments and alimony are also exempt from the reach of the creditor. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act outlines exactly what a collector can
and cannot do to attempt to collect a debt. They can call you at work. But,
they cannot let anyone know the purpose of the call. They cannot tell the boss
or secretary or anyone, that they are the ABC collection agency. If you tell
them to quit calling you at work, they must stop. They can call you at home
between the hours of
Protection Under the FDCPA
Because unsecured creditors have only one way to get their money back short
of a lawsuit, they use it to the hilt. They will call you relentlessly, send
you mail and generally try to make you wish you had never defaulted. But there
are rules according to the Fair Debt Collection Practices Act. They cannot tell
anyone that they are collecting a debt. They cannot even mark the outside of
mail notices with any indication that they are attempting to collect a debt. If
they call you at work, tell them to stop. After that, any call they make to
your business, is illegal. They must call you between the hours of
Can Student Loans be Discharged
In most cases, the student loan is not a dischargeable debt. You will have to pay these back no matter what. If you do not pay them back, they may be able to garnishee your wages. This means that a portion of your wages will be deducted before you see your check and will then be applied towards your outstanding student loans. Most student loan organizations will wait until after your bankruptcy is discharged before resuming collection attempts. There are two exceptions to this general rule. If your student loan came due more than five years before you filed for bankruptcy, then the debt is probably dischargeable. In the second case, if failure to discharge a loan would cause hardship for the debtor or their family, then the loan may be dischargeable. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
What Happens to Guarantors/Co-Signers
Cosigners are people who have lent their good name and credit to someone else so that they may get credit. This is a risk. For the small business owner who owns majority stock in a small company, the bank may ask that the owner cosign any loans made for the benefit of the corporation. There are two kinds of cosigning. Cosigning as a surety and cosigning as a guarantor. The surety is a promise directly to the creditor, that they will pay, if the primary debtor fails to pay. A guarantor, on the other hand, agrees to pay only after all avenues to get money from the principal debtor have failed. The cosigner of a note has no protection if the debtor files Chapter 7 bankruptcy. If the debtor files a Chapter 13, the cosigner need not worry. If you are unsure as to your liability as a cosigner before or after the fact, get legal advice. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Bankruptcy and Your Credit Rating
Bankruptcy is a last ditch effort which, if filed, will affect your credit rating for as long as ten years. Each time you fail to make a payment on a credit card, an electronic mark against your good credit was stamped in your record. These records are called credit reports and are kept by several large companies who do nothing except rate the credit worthiness of consumers. If you file for bankruptcy, another mark will find its way onto your credit rating. This will indicate that you filed for bankruptcy. The immediate result will mean being cut off from regular sources of consumer credit. This may include credit cards, home loans and car loans. You may be denied employment if good credit is considered necessary for the position. And, you may find it difficult to rent a home or get standard utility service. A ruined credit rating can mean a difficult life for a number of years. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Bankruptcy and Pending Lawsuits
If you are currently involved in a lawsuit in which you stand to gain you may have to use part or even all of the cash award from your lawsuit to satisfy your creditors. How a lawsuit is affected depends entirely upon the respective reasons for the lawsuit and bankruptcy. A lawsuit undertaken to help pay for current and future medical expenses in a case of negligence, will be affected by bankruptcy only such that any monies gained in the lawsuit will go towards paying for the medical costs. The bankruptcy will not allow you to skip out on your obligation to pay for your medical procedures. But you may be allowed to discharge other debts not related to your medical needs and your settlement may be exempt from many of the creditors. This is a complex area of the law which requires the attention of an expert. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
Bankruptcy Tax Issues
If you are a debtor, you may actually stand to gain from a bankruptcy, at least under regular IRS rules. When you have a debt of fifty thousand dollars dismissed, then you have effectively gained fifty thousand dollars. You may still be insolvent, but the rules would seem to indicate that you are wealthier than when you started. In recognition of this paradox, the IRS developed a policy stating that anyone who discharges debt and remains insolvent after the debt, it is not recognized as having received income. If you become solvent in any amount due to filing, than that amount is considered taxable. In the case of a business reorganization, a net operating loss is created. This has tax value and will affect the taxes of the filing company. Because the tax ramifications are complex, it is advisable to seek professional advice before filing. The information contained in this message is general and should not substitute for the advice and counsel of a licensed attorney.
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