Raftery Law Offices

 

 

 

 

 

 

 

 

 

 

We have placed a good deal of information among the pages on this website. We have tried to address some of the legal and practical issues that affect both the individual and the business debtor. This site is not intended to be the complete debtor's guide to insolvency and bankruptcy, but we are trying to make it a site where the flags are raised and you will be encouraged to seek professional advice. That advice does not have to come from us. Just talk to someone competent enough to give you real advice. Note that the information contained in this website is general in nature and is not intended to be a substitute for legal advice. Neither this site nor your access to it creates an attorney-client relationship.

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Serving businessmen, businesswomen and entrepreneurs with planning and problems related to insolvency, bankruptcy, rights of creditors and debtors, and assignments since 1974. Welcome!

Bankruptcy Court Fees Went Up November 1st. Click here for the changes.

THE INDIVIDUAL IN CHAPTER 11 VERSUS 13

When an individual cannot qualify for chapter 13 because he or she exceeds the debt limits, then you might want to consider a chapter 11 case. Be wary. There are significant differences between chapters 11 and 13. The chart which is available here points out some of the problems. Since 2005 in Massachusetts out of 495 individual chapter 11 cases filed, only 4% have received discharges. Over 60% have been dismissed or converted to chapter 7. Why? I can only speculate as to the reasons for the dismal lack of success, but here is what I think the reasons are:

1.  Counsel familiar with chapter 13 are not experienced with the different and often onerus requirements of chapter 11. For example, no vote of creditors to accept a plan is required in chapter 13 whereas in chapter 11 acceptance of a plan requires a favorable vote of a majority in number representing two-thirds of the dollar amount of those who vote;

2.  The amount of hand holding in a chapter 11 case means that a retainer of $5,000 to $10,000 is simply not enough to keep the focus of both counsel and client. The average retainer sought across the country for an individual chapter 11 case is between $15,000 and $25,000. These are not simple cases and they require a good deal of time by both counsel and the debtor to bring them to fruition;

3.  The petition is oftern reactive rather than proactive. A good chapter 11 attorney in a business chapter 11 situation has engaged in a pre-petition planning process well before the petition is filed. Both they and the debtor have a good idea of where the chapter 11 is going, what the plan of reorganization will look like and what the end game is. Many individual chapter 11 cases seem to lack that pre-petition planning.

The chart should help you understand some of the differences, but it is not the compleat guide to an individual chapter 11. That you will have to learn for yourself. References in the chart link to the Bankruptcy Code at Cornell's bankruptcy site.
 
Want to avoid litigation costs?
Considered mediation?
Why Not? It can be cheaper.

This is a logo that I recently designed for use with a mediation service with which I have affiliated. We offer free mediation services to Small Claims Court and Summary Process litigants. It provides a useful service, lightens the case load on the court and allows litigants to resolve their own problems. You would be surprised what happens when people start to communicate with each other. Since it's voluntary it does not always work, but when it does it is terrific.

 

Litigation is expensive, time consuming and unpredictable. Mediation is a process in which parties work with a neutral mediator to resolve their dispute. Mediation is not arbitration; no one dictates the resolution. The mediator helps the parties come to their own resolution.  It doesn't cost anything to ask about mediation and it has the potential to resolve your situation without the angst of expense, time and the unknown. You may want to see an example of a mediation. Click HERE to go to a short animated example of a mediation on YouTube. There are plenty of good mediators around, but on Cape Cod an excellent place to start is Cape Mediation, Inc.

 
If you think planning for a Chapter 11 is limited to the legal aspects, then think again! Planning for a Chapter 11 case does not simply mean speaking to accountants and attorneys. Smart people will speak with marketing and advertising people to plan and abate any negative impact from a filing. Some debtors will have spent weeks working with customers, letting them know that the company will likely file and being brutally honest with them as to why. They will also show their customers what they plan to do survive and emerge from Chapter 11 a stronger company. Limiting discussions to attorneys and accountants limits your chances for success.  Smart attorneys will know that there are aspects to a Chapter 11 case beyond the letter of the law.

If you operate any sized business, it is never to late to do some strategic planning if for nothing else than to avoid the pitfalls that could lead to a bankruptcy and personal angst. Tempted to borrow against the house to get cash for the business? Have you or your spouse been asked to personally guaranty bank debt, trade credit or a lease? These are among the red flags that should give you warning to proceed with caution.

Note that the information contained on this website is general in nature and is not intended to be a substitute for legal advice. Neither this site nor your access to it creates an attorney-client relationship between you and us.
 
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Raftery Law Offices

©2011 Thomas J. Raftery - All rights reserved

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