Articles Posted in Chapter 13

The rapper 50 Cent, also known by his birth name Curtis James Jackson III, filed for a Chapter 11 bankruptcy on Monday. The bankruptcy petition was filed in a Connecticut bankruptcy court, and the documents showed Jackson’s total assets were valued in the range of $10 million to $50 million. What is unique about 50 Cent’s filing is that he filed under Chapter 11 rather than filing a Chapter 13 bankruptcy.

So what is a Chapter 11 bankruptcy? A Chapter 11 Bankruptcy is mainly filed by small businesses and allows the business to restructure its finances through a repayment plan approved by the court. Large businesses like General Motors and Carmike Cinemas have also filed for this type of bankruptcy.   Generally, a Chapter 11 repayment plan allows a debtor to balance its income and expenses, regain profitability, and continue to operate as a business in the mean time.

When a business declares bankruptcy it must follow the rules and requirements of the bankruptcy court to discharge its debts. A Chapter 11 bankruptcy may also be filed by a “small business debtor,” which is a person or entity who: 1) is engaged in business or other commercial activities; and 2) owes no more than $2,490,925 in total claims.

Bankruptcy often comes with a negative social stigma, but bankruptcy is not a moral choice. Bankruptcy is an important financial planning tool that allows debtors a legal option to get out of a desperate situation. Studies by the Federal Reserve Bank of New York have shown that people in debt who file for bankruptcy do better financially than those who do not. So declaring for bankruptcy can be a great way to get back on track; however, there are some things that a person in debt should not do before declaring bankruptcy.

Do not create new debt.

If you plan on filing for bankruptcy, try to avoid creating new debt. The consequences of creating new debt can be severe, as a new creditor can claim the debtor took out a new loan, opened a credit card, or acquired a new debt without the intent of paying it back. A creditor could argue this is fraud because the debtor never intended to pay it back. If the court agrees the act was fraudulent, the debt will not be discharged in bankruptcy and the debtor will still owe the whole debt.

First, it is very important to note that Florida does not legally recognize “legal separation.”

However, the current bankruptcy laws allow a debtor to file an individual bankruptcy regardless of whether he or she is married or in the process of getting a divorce. A debtor is allowed to file a joint or individual bankruptcy during a marriage or during an ongoing divorce.

Generally, when a person is married and filing bankruptcy, either individually or jointly, the income of both spouses determines what type of bankruptcy a debtor can file; either a Chapter 7, 13 or 11. This is known as household income in bankruptcy. Even if only one spouse is filing bankruptcy, the income of the other non-filing spouse will be taken into consideration and must be disclosed to the trustee and court.