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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

Business Bankruptcy: Attempt a Reorganization or Liquidate?

If you own a business and are facing financial difficulty, you may be considering a chapter 11 bankruptcy thinking that it can fix your business’s financial woes.  However, many people underestimate the difficulty of completing the chapter 11 process through confirmation of a chapter 11 plan.  Filing a chapter 11 bankruptcy to attempt to save a business with no prospect of reorganization will just be wasting more money only to prolong the inevitable.  This blog will evaluate factors to look for at the outset of contemplation of bankruptcy and guide your decision as to whether to attempt a reorganization or to liquidate the company. 

Understanding Your Credit Report and Bankruptcy

A credit report is a statement that contains various information regarding an individual’s credit activity and current credit status such as a debt payment history and the status of current credit accounts.  The report contains information about a person’s addresses, how they pay their bills, whether they’ve been arrested or sued, and whether they have filed for bankruptcy. 

There are three major credit reporting agencies (“CRAs”): TransUnion, Equifax, and Experian.  CRAs sell information contained within a credit report to creditors, insurers, employers, and businesses that use the information to evaluate applications for credit, insurance, employment, obtaining a loan or renting housing.  Scoring companies, such as FICO, take information from a consumer’s credit report and put it into a formula to come up with a credit score.  FICO scores range from 300 to 850.  The number represents an estimate of a person’s “credit worthiness” or likelihood that they will default on a debt.    

When Is it Time to Consider Filing for Bankruptcy?

Considering filing for bankruptcy is never easy, in fact, it will probably be one of the most difficult financial decisions that one will make. Nevertheless, once the decision is made and people begin to experience the relief that bankruptcy provides, they see what it’s like to have a financial fresh start and a stress free life. But, when should one begin to consider filing for bankruptcy? If you’re unsure, here are some signs that will help you decide on whether maybe it is time to consider filing for bankruptcy.

Changing Your Name

Do you dislike your name? Perhaps, you have gone by a middle name, nick name, or shortened version of your name for a majority of your life. Now, legal documents such as your driver’s license, passport or social security card are the only places where your birth name exists. Why not legally change your name? Generally, the process is quick and inexpensive. Scura, Wigfield, Heyer, Stevens & Cammarota LLP is a multi-practice law firm capable of handling your name change and other legal needs.  

Knowing the Creditors Time to Collect on a Debt

It is crucial to fully understand how long a creditor has to collect on a debt.  There are a series of laws in place that govern debt collection procedures including for example: the timeframes for collecting a debt, the practices and procedures for collecting a debt, and the penalties for violating these procedures.  This series of laws is called the Fair Debt Collection Practices Act (“FDCPA”). 

The New Jersey Fair Debt Collection Practices Act (“NJFDCPA”) fortifies the federal FDCPA and bans debt collectors from using unfair and dishonest practices.  As with the federal law, the NJFDCPA guidelines apply only to debt collectors and does not apply to original lenders.  The FDCPA defines a debt as any obligation of a consumer to pay money arising out of a transaction primarily for personal, family or household purposes, including money owed on a personal credit card account, an auto loan, a medical bill or mortgage.  The FDCPA prohibits debt collectors from using abusive, unfair or deceptive practices when attempting to collect a debt.   

Should I make my Start-Up Company a Limited Liability Company or a Corporation?

As a full service law firm, Scura, Wigfield, Heyer, Stevens & Cammarota LLP provides legal services and advice to both established corporate entities and start-up companies. One of the most common questions that individuals looking to launch a start-up company ask is: What type of business entity should I form? Our firm has extensive experience with Limited Liability Companies, C-Corporations, S-Corporations, Partnerships, and Sole Proprietorships. Notwithstanding, the most common types of business entities are LLCs and Corporate Entitles, C-type and S-type. This blog will focus on the legal issues related to the two most common business entities. Lastly, please speak with a tax professional prior to forming a corporate entity to determine which tax classification is best for your business purposes.

The Appointment of a Rent Receiver after Mortgage Loan Default

A mortgage holder is entitled to an order appointing a rent receiver to collect rents (as that term is defined in the loan documents) and maintain the mortgaged premises in the event of a borrower’s default.  Failure to make obligatory monthly installments of principal and interest is a defined as a default under most mortgage notes and mortgages.

Expunging a Costly Criminal Mistake

For many people, a past criminal conviction continues to negatively impact their prospects of future happiness. With easy access to information, many employers, landlords, educators and licensing agencies now require a criminal background check when considering potential candidates. Obviously, a past criminal conviction weighs negatively for a candidate in any application process. If you have experienced this, “expungement” may offer relief.  

Leaving Your Co-Debtor as the Sole Debtor

It is important for every individual who is filing bankruptcy to consider whether they want to file their case individually or jointly, with a spouse.  Only spouses can file a bankruptcy petition together.  In order to make this determination, the potential client must determine whether there is anyone else responsible for their debts (known as a co-debtor).  A co-debtor is a co-signer for the debt and is equally responsible for the debt regardless of whom may be the primary account holder.  Often, debtors have a joint credit card with a spouse, a joint line of credit (or mortgage), or have co-signed on an automobile or student loan.  The bankruptcy filing can affect the non-filing co-debtor’s liability for the debt.  Therefore, it is imperative that co-debtors are properly listed in the bankruptcy case.

Bankruptcy Is An Option to Deal with Debt From a Vehicle Repossession

If you have recently had a vehicle repossessed, you are probably feeling overwhelmed at the prospect of a large debt hanging over your financial future.  Vehicle lenders tend to be aggressive in their collection techniques, so it is likely that harassing phone calls will commence soon after the repossession.  Often, the vehicle lender will commence litigation to try to recoup their losses against the borrower after the repossession.  If you are in this situation, then bankruptcy may be your solution.

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