The Morality of the American Airlines Chapter 11 Reorganization
A corporation which files bankruptcy is considered to be proactively using a strategic business tool. But a human being who files bankruptcy is considered to be irresponsibly breaking promises to creditors. Let’s see if this difference in attitude makes sense using the example of the bankruptcy filing of American Airlines in late November. Selecting […]
Anatomy of the American Airlines Bankruptcy
A corporation files a Chapter 11 business “reorganization” and tends to be seen as engaging in proactive strategic planning. A human being files a Chapter 13 consumer “adjustment of debts” and tends to be seen as an irresponsible failure. Let’s think about this from the perspective of American Airlines bankruptcy filing of last year, which […]
Keeping Everything You Own in Bankruptcy
You want to know: “Can I really keep everything I own if I file bankruptcy?” A two-part answer: 1) Yes, you can, usually, keep those possessions that are all yours (you don’t owe any money on them). 2) Yes, you can, usually, keep those particular possessions on which you are making payments to a creditor […]
The Very Rocky History of U.S. Bankruptcy Law
You think the present Congress can’t get anything done? It took more than a hundred years for Congress to pass the first permanent bankruptcy law. Lots of people know that bankruptcy was important enough to our founders to be included in the U.S. Constitution. But that’s just the very beginning of the story: The […]
The Amazing but True Evolution of Bankruptcy Law
You’ve heard of debtors’ prisons. But that’s only one hideous part of the very colorful history of bankruptcy law. American bankruptcy law was based on the law of England at the time of the colonies. Today’s blog tells how incredibly different pre-Revolutionary War bankruptcy laws were from current law. The first bankruptcy law in […]
Bankruptcy Can Save Your Business
Bankruptcy isn’t just for cleaning up after the death of a business. It can keep your business alive. Bankruptcy saved General Motors. That business got out of a lot of it debt and restructured its operations, and ended up saving a lot of jobs. If you operate your own small business, bankruptcy may be […]
Four Hoops to Jump Through to Write Off Income Taxes in Bankruptcy
The conditions you have to meet to write off an income tax debt actually make sense. And understanding those conditions is a lot easier if you understand the sense behind them. In my last blog I introduced the four conditions for discharging taxes in a Chapter 7 “straight bankruptcy,” and said I’d explain them in […]
Taxes and Bankruptcy—Debunking a Hardy Myth
No wonder people think “bankruptcy can’t help me with my tax debt.” Even attorneys sometimes perpetuate the myth. A few days ago I saw a video of a bankruptcy attorney being interviewed in what amounted to be an infomercial. He was asked by the interviewer whether there were some debts that can’t be “touched” in […]
Avoid the “Presumption of Fraud” for Using Credit Cards before Filing Bankruptcy
Using credit card cards when you’re thinking about filing bankruptcy, even to a relatively modest extent, can mean that you will have to pay back the amounts of those purchases if you file a bankruptcy. That could happen even if at the time you made those purchases you fully intended to repay that credit—in other […]
Avoiding Judgments that Can Really Hurt You, and Hurt Your Bankruptcy
Many judgments against you don’t matter once you file a bankruptcy. But certain ones are very dangerous. How can you tell the difference? Letting a creditor get a judgment against you after it has sued you can sometimes result in that debt not being written off (“discharged”) in a later bankruptcy case. Or that debt […]