In our continuing effort to provide unparalled service and resources to our clients, Security Financial Solutions, LLC has provided  our clients with this free, online Resource Center.

Here, our customers can find detailed information concerning many aspects of debt, collections,and recovery. Understanding the terminology and laws is one of the first steps towards building an effective collections policy.

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial “fresh start” from burdensome debts.

Three basic types of bankruptcy cases are provided for under the Bankruptcy Code, each of which is discussed: Chapter 7, which involves liquidation of assets; Chapter 11, which deals with company or individual reorganizations; and Chapter 13, which is debt repayment with lowered debt covenants or payment plans. Bankruptcy filing specifications vary among states, leading to higher and lower filing fees depending on how easily a person or company can complete the process.

If one of your debtors files for Bankruptcy there are specific rules that you need to follow, but you do not automatically need to give up all hope of recovery. SF Solutions can help you evaluate each situation and recommend the most promising course of action.

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Chapter 7

entitled Liquidation, This is a court-supervised procedure by which a trustee takes over the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secured creditors. A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. The debtor normally receives a discharge just a few months after the petition is filed.

Chapter 11

entitled Reorganization, ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability.

Chapter 13

entitled Adjustment of Debts of an Individual With Regular Income, is designed for an individual debtor who has a regular source of income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep a valuable asset, such as a house, and because it allows the debtor to propose a "plan" to repay creditors over time – usually three to five years. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect.

Bankruptcy Dismissal

In order to qualify to get debts discharged in bankruptcy, the debtor must follow the many rules set by statute. If the filing parties do not do everything that is required, including being honest and cooperating with the bankruptcy trustee, there is a chance that the case might get dismissed before a discharge of debts is issued. In a Chapter 7 bankruptcy, these debts will remain after the case is over. If a Chapter 13 bankruptcy is filed, the non dischargeable debts will have to be paid in full during the term of the plan or a balance will remain due and payable at the end of the case.