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JP, Attorney
Category: Bankruptcy Law
Satisfied Customers: 109
Experience:  Represented creditors and individuals in bankruptcy and consumer matters.
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I am going thru a Divorce, and My Business is suffering, approx

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I am going thru a Divorce, and My Business is suffering, approx 200K in debt, and the Union is trying to get a 225K judgement for ERISA liability. Should I declare bankruptsy?

Bankruptcy may be a viable option for you, because once the bankruptcy case is filed it will force the creditors to stop any and all collection activities (including the ERISA lawsuit) and will require your creditors to work through the bankruptcy process.


Once this happens, you will have a better chance at restructuring your debt and devise a plan to repay your debts and get yourself back on track.


Your creditors can still pursue you in the bankruptcy case, but it will be in a more structured fashion and they will have to comply with the federal bankruptcy code, which offers many protections for the bankrupt debtor. The code will allow you certain options that may totally relieve you from certain unsecured debt that is overly burdensome and will also allow you the chance to surrender your interest in any secured debt that may not be working to your benefit at the moment.


Bankruptcy can certainly be a practical solution to your problems. As an aid, below is some information regarding the different types of bankruptcy that you may want to consider. You should consult with a bankruptcy attorney in your area to decide which chapter (7, 11 or 13) best fits your financial needs.



Chapter 7 - Chapter 7 bankruptcy is a liquidation proceeding available to consumers and businesses. Those assets of a debtor that are not exempt from creditors are collected and liquidated (reduced to money), and the proceeds are distributed to creditors. A consumer debtor receives a complete discharge from debt under Chapter 7, except for certain debts that are prohibited from discharge by the Bankruptcy Code.


Chapter 13 - often called wage-earner bankruptcy, is used primarily by individual consumers to reorganize their financial affairs under a repayment plan that must be completed within three or five years. To be eligible for Chapter 13 relief, a consumer must have regular income and may not have more than a certain amount of debt, as set forth in the Bankruptcy Code. You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.


Chapter 11 - This is used mostly by businesses. In chapter 11, you may continue to operate your business, but your creditors and the court must approve a plan to repay your debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.


I hope you found this information helpful.


Best Regards,

JP and other Bankruptcy Law Specialists are ready to help you
Customer: replied 9 years ago.
Thank You for your thurough answer. I will accept the response and would like one more bit of information, Is ERISA judgement dischargeable thru BK?

The judgment should be dischargeable as long as it remains unsecured. If you allow enough time to pass the crafty creditor (including those pursuing ERISA claims) will attempt to perfect a lien with their judgment. When this happens, the once unsecured judgment will become secured and you will have to treat it as such in the bankruptcy case.


However, be advised that there are specific rules to dischargeability that you should discuss with an attorney in your area. The attorney can review the specifics of the ERISA case and judgment and be able to confirm whether it is dischargeable.