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Bankruptcy - Business Law Related Questions

Do you have questions related to bankruptcy? Or, what the difference is between a judgment proof debtor and debtor in bankruptcy? Debtors being unable to pay their loans can leave them stressed and the creditors agitated. Bankruptcy is usually the last option or resort and it can be a saving grace for the concerned parties. Engaging in such a process can be complicated and time consuming, not to mention the likelihood of various questions and doubts arising is high. This is where Experts can pitch in and provide important insights and professional opinions.

Read below where Experts have answered a few questions about bankruptcy.

Can the lender assume a risk of the borrower going bankrupt after taking on a commercial real estate loan?

Usually, most lenders assume the risk that there are chances of the borrower going bankrupt and this is the case with both commercial and consumer lending. In the event of the borrower defaulting and filing for bankruptcy protection, the creditor will need to defend their claim in the bankruptcy court. If it was a secured loan with a note or deed of trust, the creditors fall under the category of ‘secured creditors.’ This helps obtain significant protection in the bankruptcy proceedings. However, in such a scenario as a creditor one is bound to lose money but the status of a secured creditor is better than that of an unsecured one.

What is the 90-day rule with respect to bankruptcy?

This is in reference to the concept of ‘avoidable preferences.’ The 90-day rule is mainly related to payments made to creditors, where payment is made within the 90 days prior to filing for bankruptcy. Since the law aims to ensure some creditors do not get preferential treatment over the others, this rule is enforced. If as a borrower, assets are sold for a fair market value and converted into cash, you can choose to probably pay creditors using this cash rather than removing it from the business without good reason, prior to filing for bankruptcy. However, these aspects are more complicated and the rules need to be read carefully along with consulting a bankruptcy attorney in advance of a contemplated bankruptcy filing.

Can checks be made payable to a third party if a garnishment order is present on a person’s bank account?

Usually, garnishment orders are specific to the debtor’s bank account where the creditor can garnish only this account. Additionally, if checks are issued to others, there is a provision referred to as ‘Uniform Fraudulent Transfer Act.’ This act permits creditors to pursue assets that debtor places into other people’s names for safety. If this is being done solely to evade creditors because of the inability to repay a debt, the main option one is left with is to consider filing for bankruptcy protection. There are specific bankruptcy attorneys who do not charge much for their services and can help maximize the post-discharge financial position. They also ensure that the schedules are filed correctly to avoid problems with the filing.

What is the difference in being a debtor in bankruptcy and a judgment proof debtor?

If a judgement has been taken out against a debtor and in the meantime, they fail to file for bankruptcy, then the judgment against the debtor would become enforceable. This can have serious effects on the credit standing of an individual as the judgment will be recorded on to the credit report. On the other hand, if the debtor files for bankruptcy, the credit standing is likely to recover faster because of the judgment being extinguished. It would be wise to file for bankruptcy and deal with the entire issue in approximately 120 days. This prevents having to go to court and provides a fresh start for the financial future.

After filing Chapter 7 Personal Bankruptcy, can a creditor go after a non-functional corporation?

Case Details: The Corporation has no assets and owes tax to the city.

If the company is out of business and owns no property or assets, there may not be a need to file bankruptcy of the company. This is because there are no assets that a person can recover from it even in the event a judgment being obtained. Such a judgment against a defunct company would be uncollectible, and if you have filed individually, it would rid you of any liability from a personal standpoint or as a personal guarantor of the company. Also, while filing for bankruptcy, you need to ensure the lawyer files a motion for relief from the judgment to erase any lien in addition to erasing liability. If a discharge in bankruptcy for your personal liability for the debt is received and this should include any personal guarantee provided on behalf of the company, the debt would get cleared, leaving no personal liability. However, mere receipt of discharge from liability entails that the judgment lien remains unless the lawyer files a motion for relief from the judgment lien by filing for bankruptcy.

Would signing a promissory note prevent one from filing for bankruptcy?

If a person does qualify for bankruptcy, any signed promissory note would not prevent them from filing for bankruptcy with the intention of seeking to extinguish the debt as part of the bankruptcy.

Inability to pay debt can lead to a lot of stress and tension especially if the situation is not conducive or under your control. This is when the bankruptcy process can be something that can help immensely to get by at a time of need. If you have other questions on the requirements and bankruptcy eligibility pertaining to your individual situation contact legal Experts online for guidance and professional insights, quickly and more importantly, affordably.

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