You have probably shopped in a store that has filed bankruptcy. Perhaps even during the past holiday season. Just recently Bed Bath & Beyond and Party City are on the brink of joining a growing list of U.S. retailers who have gone into Chapter 11 bankruptcy. Highly recognizable names such as Neiman Marcus, Sears, and J Crew have gone into bankruptcy, with some emerging and others disappearing entirely. If everyone at the local mall and strip shopping center has filed for the protection bankruptcy offers, should you?
New Year, New Plans?
Everybody asks what you are planning for New Year's Eve. They ask what your New Year's resolutions are. Few people ask about your working goals for the new year.
You make plans to attend graduations and weddings. You have a goal of zipping off to a wonderful vacation. Shouldn't you also be setting financial goals? Shouldn't you be planning to examine your financial health? Would bankruptcy be worth considering?
Some reasons to declare bankruptcy:
- You will owe taxes and have no way to pay the IRS
- You lost your job
- Credit cards minimum payments have climbed so high, with rates fueled by inflation, that you cannot afford them
- Medical costs have overwhelmed you
- The car's engine quit and you had a pipe burst in the recent freeze and the repairs are expensive
- Divorce leaves you with plenty of debts but only half the income
Bankruptcy is a legal, rational solution to many stressful financial dilemmas. Texas bankruptcy courts routinely provide relief to your neighbors and friends. If the process is good enough to help Men's Wearhouse shed debt and emerge newly invigorated in only five months, it is surely good enough to help you.
Chapter 11 is Not The Bankruptcy You are Looking For
All the companies we mentioned filed for temporary relief under Chapter 11 bankruptcy law. Companies can tap the legal shelter of Chapter 11 bankruptcy, but individuals typically do not unless they need a plan of reorganization and their debts exceed the debt limits of Chapter 13, which is $465,275 for unsecured debts.
In Texas, you are blessed with two options when filing for personal bankruptcy:
- Chapter 7 bankruptcy—this is generally the option for people who qualify based on income and household size and their debt problem is credit cards
- Chapter 13 bankruptcy—this is generally the option for people who are trying to stop an IRS wage garnishment or need to repay mortgage arrears or don't meet the income and household size requirements for a Chapter 7
Both methods can help you to get your new year in good shape, but they are not identical. The best way to determine your needs is to sit down with a bankruptcy attorney and explain your situation. Your experienced, supportive attorney can counsel you on the method of relief that will work better for you and your family.
How Do They Go On?
You may wonder how companies can enter bankruptcy and somehow keep going. Chapter 11 bankruptcy restructures a failing company's debt. It does not necessarily eliminate all of it. Some debt is shed by offering creditors pennies on the dollar; a lot of debt is shed by drastic measures:
- Laying off workers
- Permanently closing stores
- Selling real estate
How Do You Go On?
Families and individuals are not companies. You cannot very well stop doing business as, say, the Smith Family and all go your separate ways. With either kind of personal bankruptcy, the courts expect you to go on and you do. And in most instances, people go on and flourish after the completion of a banrkuptcy.
Big, powerful business giants like Texaco have buildings full of attorneys packed in like sardines (ok, maybe since the pandemic they're working remotely, but you get the point), all working frantically to shield the companies from any risk. Entering Chapter 11 bankruptcy becomes a great protection from creditors.
The same protections from creditors are available to you as an individual. You can tap the legal shield of court-ordered protections against:
- Wage garnishment
- Creditor harassment
No, you are not General Motors. But you have every right to join the high and mighty, from food company Hostess and clothier Gloria Vanderbilt to fast food businesses like Sbarro, all of which declared bankruptcy.
Can you still buy a GM car, drive to the mall to buy Gloria Vanderbilt jeans, eat at Sbarro, and buy a Twinkie? Yup. All because bankruptcy worked for those businesses. And it can work for you. And it worked for Walt Disney too, but that is a different post.
Théda Page, Collin and Denton Counties' trusted, experienced, compassionate bankruptcy attorney, can help you. Théda will use her decades of experience protecting your financial security. Call (214) 618-2101 for a confidential consultation at The Page Law Firm, or contact our offices today.