– So I’m often asked by people if they qualify for bankruptcy. I find that to be a strange question, but I understand that most of you don’t understand that everybody qualifies for bankruptcy. It’s just a matter what kind of bankruptcy makes sense for them. Generally, people believe bankruptcy to be the typical I walk away from my debt. I don’t have to pay anybody back. That’s what the call a Chapter 7 bankruptcy. It’s a liquidation. In a Chapter 7 case, a trustee will be appointed. If you have assets that are non-exempt, and non-exempt is something we can discuss at a different time. But really what it means is that you have a lot of equity, meaning anything you own. The Bankruptcy Code allows us to have property and allows us to have equity in things. But if we have a lot of equity, so much so that it would be unfair not to pay anybody back, they call that non-exempt equity. In the case that we file a Chapter 7, in the Chapter 7 case, there’s property that has non-exempt equity. And if it’s significant enough, the Chapter 7 trustee will seek to sell that asset. And if he does and he recovers money, that money will then go to your creditors in proportion to the claim. Of course, we generally screen these out well so we know if there’s non-exempt equity and if there is, we’re probably not filing a Chapter 7 unless we know, going in, that our plan is to sell that asset and we either will work out a deal with the trustee and know it going forward. I don’t think it’s ever happened that we filed a case where we didn’t know that there was a potential that a trustee could sell an asset. Keep in mind that, if the mistake like that were to happen or, later on, things change, and there is that unprotected equity that a trustee may seek to sell, there’s ways we can resolve that. Either we can settle with a trustee or we can convert this case. We talked about Chapter 7s. Generally, you file. Anything you had that was so much in value that it wouldn’t be fair to walk away from your debt, the trustee will seek to sell, pay it to creditors, or, in most of the cases, there isn’t anything. The trustee simply abandoned those assets. Any debt you had prior to filing is discharged. And then, for 60 days after meeting with a trustee, the case is generally closed. But there’s also a Chapter 13 bankruptcy. Chapter 13 bankruptcy is a reorganization. It’s a reorganization for individuals. Now this is the type of case where you may hear people paying their trustee over a period of time. A Chapter 13 generally goes on for as much as three to five years. You may have to be in a Chapter 13 if you have so much equity and property that, it would be unfair to not pay anybody anything, then we’d be in a Chapter 13 because in a Chapter 13, we can protect that equity. We don’t have to sell assets. We just have to make sure that unsecured creditors are getting at least what they would get in a Chapter 7. It may also be that you make too much money. If you make too much money and you have extra money, again, it wouldn’t be fair just to walk away from your creditors and not pay them anything. So we take that extra money and we pay it back to creditors over a period of time. Again, it’s almost never that we pay them in full, but we will be paying them something ’cause again, it wouldn’t be fair not to. It may be time where you could qualify for a Chapter 7 because you don’t have property or we’re not making too much money but we want to be in a Chapter 13 where we can reorganize our debts. It may be that you are behind in your mortgage payments or you have taxes that we need to get caught up on. A Chapter 7 doesn’t allow us time to get caught up on past due mortgage payments. It doesn’t allow us to force the IRS or the state of Jersey to a payment plan, but a Chapter 13 does. Chapter 13 is generally filed by those people that want to save a house, for instance, but they’re facing a foreclosure sale. In a Chapter 13, not only can we stop the foreclosure sale, but we can give the individual time to get caught up on the past due payments. It also provides the homeowner time to try to get a loan modification. Even if you tried before, once we file, the bankruptcy court will actually help us through that process of obtaining a loan modification. They won’t compel the mortgage holder to give us a loan modification, but they will compel them to work with us in good faith to try to get it done. I found that, generally, if you can afford it, and it makes sense, we can get it done. But keep in mind that even if we can’t get a loan modification, We can still keep the mortgage holder at bay and give you time to get caught up on those past due payments over time. So a Chapter 13 isn’t always because you have to be there. It’s sometimes because you want to be there. And we file many for that very reason. A Chapter 11, people have heard about, and generally, it’s in the context of a business. You may hear GM’s filed Chapter 11. And generally, Chapter 11 is for businesses. Chapter 11 is a reorganization of a business. However, there’s times where an individual would file a Chapter 11 as well. Under the Bankruptcy Code, you can only file a Chapter 13 if you’re an individual – businesses can’t file 13 – and you meet certain debt requirements. If you have too much debt, and that number changes all the time, but right now, the new number is found here actually. You’ll find it here ’cause it changes about every year. But if you exceed the debt limit, then you don’t qualify for Chapter 13. And what you have to do is now just reorganize, but you reorganize under a Chapter 11. Chapter 11 gets the businesses, but individuals can file Chapter 11. The end result really is the same except the process is much more complicated. It’s still a reorganization. You can do the same thing as Chapter 11 as you can at Chapter 13, but the process and procedure and the parties involved is more complicated. My firm files more Chapter 11s for individuals than anyone else in the state. We do this every day. It can be done. It does take extra effort on both our parts. And yes, it is more expensive. But keep in mind, the result’s the same at the end of the day. So Chapter 7, generally liquidation. Most people don’t have anything to liquidate so the case you’re in, debt’s gone, case closes. Chapter 13 is a reorganization. Usually is there for to give you time to get caught up on past due payments. Or, if you’re making too much money and it wouldn’t be fair to walk away, you just pay back that extra money over a period of time to your creditors. Whatever they don’t get paid goes away as well. They’ll likely get paid pennies on the dollar. The difference will be discharged. Chapter 11, reorganization. Generally for businesses, but individuals can file Chapter 11 as well. There’s also Chapter 12 if you’re a farmer, but I’ve only had one of those in my whole career.