A lot of people know that I’m a Riverside Bankruptcy lawyer and from time to time that means that I am answering “trivia” questions about “why” something is, or “what” something means.
A question I get quite often is: Why is it Called Bankruptcy “Protections”? People are somewhat misinformed about bankruptcy and what it can mean for someone. Chapter 13, for example, does protect individuals who want to keep their house or car from being repossessed or foreclosed upon. It forces all parties into the courtroom where a judge may assess the situation against the legal rights and protections afforded to the individual by bankruptcy laws. An individual is then given a 3-5 year repayment plan with structured payments that are handled by a bankruptcy trustee. In the case of Chapter 11 bankruptcy, it is sometimes used by individuals not because their business is going sour but to prevent another party from taking ownership. Here’s an example:
Eva Longoria is part-owner in the Vegas restaurant and night club “Beso”. When faced with the potential of being sued by a potential business partner, Longoria actually used Chapter 11 filings to protect the business from being taken (or partially taken) over. Part of what Chapter 11 and Chapter 13 can do is “restructure” debt—unlike Chapter 7, which is basically a clearing of the entire plate with a “do over”. During this period of restructuring your assets are “protected” from being seized by creditors. At some point I will get serious and write a blog about what happened to Washington Mutual, but that is a topic for another day. This Riverside bankruptcy lawyer has some work to do!
Please contact our Riverside office at (951) 686-3880 or via email at info@attorneydebtreset.com