Bankruptcy

Filing for Bankruptcy in West Virginia

High unemployment, the housing crisis, and global competition all put enormous pressure on West Virginia families and businesses. While many individuals and companies hang on by spending or borrowing less, others can no longer manage their debt obligations. When liabilities outweigh assets and income and debt repayment becomes difficult, it may be time to consider bankruptcy. By filing for bankruptcy protection, individuals and businesses can obtain debt relief, preserve important assets, and gain a more stable financial footing.

What are my West Virginia Bankruptcy Options? The federal bankruptcy code provides for several types of bankruptcy, each of which has unique rules and requirements.

The most common forms of bankrupcy include:

Chapter 7: To qualify, your monthly household income must be less than the West Virginia median income for a household of your size. Chapter 7 is especially beneficial for those with high unsecured debt, such as medical or credit card bills.

Chapter 11: To qualify, filers must be corporations or partnerships. Chapter 11 allows businesses to reorganize and restructure their debts and contracts under more favorable terms so they can continue to operate while repaying creditors.

Chapter 13: To qualify, your monthly household income must be more than the West Virginia median income for a household of your size. A Chapter 13 may also be utilized if you are behind on your home mortgage or car loan payments. Chapter 13 is a repayment plan that reorganizes debt under more favorable terms so that debtors can repay them within three to five years.

We offer WV Bankruptcy and Business Legal Services

Since we also have experience in complementary legal practice areas, such as tax and estate planning, business law, and real estate—as well as divorce and family law—our attorneys can help you with virtually all aspects of your bankruptcy in WV and explain how it will likely impact other areas of your financial life. Many of our West Virginia business lawyers have high-level degrees in business, economics, or accounting as well as their Juris Doctor (JD), so they can provide informed, insightful advice and counsel on the tax effects of bankruptcy and how reorganizing debts can lead to a more successful future.

Notes on Bankruptcy The Following Details Bankruptcy and What You May Need to Get Started

Chapter 11 Debtor in Possesssion

Upon the filing of a voluntary petition for relief under Chapter 11 or, in an involuntary case, the entry of an order for such relief, the debtor automatically assumes an additional identity as the “debtor in possession.” The term refers to a debtor that keeps possession and control of its assets while undergoing a reorganization under Chapter 11, without the appointment of a case trustee.
Debtor Remains Debtor in Possession until a Reorganization Plan is Confirmed: A debtor remains a debtor in possession until the plan of reorganization is confirmed, the case is dismissed or converted to Chapter 7 or a Chapter 11 trustee is appointed. The appointment or election of a trustee occurs only in a small number of cases. Generally, the debtor, as debtor in possession, operates the business and performs many of the functions that a trustee performs in cases under other chapters.

Debtor in Possession in Position of a Fiduciary: The debtor in possession is placed in the position of a fiduciary, with the rights and powers of a Chapter 11 trustee, and is required to perform all but the investigative functions and duties of a trustee. The debtor’s powers and duties include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the United States Trustee, such as monthly operating reports.

Debtor in Possession has many Powers and Duties of a Trustee: The debtor in possession also has many of the other powers and duties of a trustee, including the right, with the court’s approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case. Other responsibilities include filing tax returns and filing such reports as are necessary or as the court orders after confirmation, such as a final accounting. The United States Trustee is responsible for monitoring the debtor in possession’s compliance with the reporting requirements.

Converting a Chapter 13 to Chapter 7

A Chapter 13 bankruptcy filing may be converted into a Chapter 7 bankruptcy filing. One common reason for converting from Chapter 13 to Chapter 7 is a petitioner’s inability to stay current in the Chapter 13 repayment plan. A petitioner may not convert a Chapter 13 to a Chapter 7 if the petitioner has already received a Chapter 7 discharge within the previous eight years.

A Chapter 7 bankruptcy does not involve the filing of a plan of repayment as in a Chapter 13 case. Rather, a Chapter 7 case involves the bankruptcy trustee gathering and selling the debtor’s nonexempt assets, from which creditors will receive distributions in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors.

In a Chapter 7 bankruptcy, unlike a Chapter 13 bankruptcy, the petitioner is required to give all nonexempt property to the trustee, who will sell it to pay the petitioner’s creditors. However, very few people actually lose property in a Chapter 7 bankruptcy. A petitioner that originally filed a Chapter 13 bankruptcy might not want to convert to Chapter 7 if that petitioner has substantial equity in his or her house, motor vehicles, stamp or coin collections, substantial investments, expensive jewelry or family heirlooms because these items are subject to the Chapter 7 exemption limits. Therefore, conversion of a Chapter 13 to a Chapter 7 may result in a loss of property.

One benefit to sticking with a Chapter 13 is the impact on the petitioner’s credit report. Although both types of bankruptcy can be reported legally by credit bureaus for 10 years from the date of filing, the major credit bureaus have voluntarily agreed to remove Chapter 13 bankruptcies after seven years from the date of filing.

Employment Termination Based on Debtor Status

The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case or has not paid a debt that was discharged in the case.

The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.

An employer can’t discriminate against an employee because a credit background check revealed that the employee sought protection under the Bankruptcy Act. What this means is that an employer can’t deny employment or a job promotion or a reassignment solely because of bankruptcy or the bad debts one had before claiming bankruptcy.

If an employee has been fired without a good reason or in violation of federal or state law, it may be a wrongful discharge and the employee can challenge the firing. The laws regulating firings vary from state to state. If the employee succeeds, employers can be made to pay back wages, fines, and possibly punitive damages or the employee could be returned to his or her job.

Turnover to the Trustee

The Bankruptcy Code requires an entity in possession, custody, or control of property of the estate, including exempt property, to deliver that property to the trustee, unless the property is of inconsequential value to the estate.

Debtors must turn over property of the personal bankruptcy estate that is not specifically exempted, or provide the cash value of the property to the trustee. Property, whether tangible or intangible, levied upon prepetition but not transferred prepetition is property of the bankruptcy estate subject to turnover. Any tangible property seized prepetition but not sold prepetition is property of the bankruptcy estate subject to turnover.

Third-party debtors who owe money to the debtor in personal bankruptcy must pay the trustee promptly. Third-party debtors who do not have actual notice of the commencement of a personal bankruptcy case are not punishable for failure to pay the trustee. Life insurance companies are exempted from prosecution and are allowed to take property from the personal bankruptcy estates of their policyholders. Attorneys, accountants, bookkeepers, and others that hold records of the debtor and personal bankruptcy estate must turnover records to the trustee when given notice of a court order.

After turnover, seizure, or forfeiture, the trustee is subject to strict requirements regarding the sale of assets. Notice of a pending sale must be given to all creditors who file a proof of claim. Trustees are directed to advertise public auctions. However, other than large commercially advertised auctions, few people receive actual notice of trustee auctions.

Voidable Transfers

The trustee in bankruptcy is a lien creditor and a successor to certain creditors and purchasers. As of the commencement of a bankruptcy case, the trustee or the debtor in possession has the rights and powers of the debtor and may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by certain creditors and bona fide purchasers. This is known as “avoiding” powers. Such powers may be used to undo a transfer of money or property made during a certain period of time prior to the filing of the bankruptcy petition. Avoiding powers are used to prevent unfair prepetition payments to one creditor at the expense of all other creditors.

The trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under the Bankruptcy Code. By avoiding a particular transfer of property, the debtor in possession can cancel the transaction and force the return or “disgorgement” of the payments or property, which then are available to pay all creditors. Generally, the power to avoid transfers is effective against transfers made within 90 days prior to the filing of the petition. For preference purposes, a security interest in property is transferred when it takes effect between the transferor and the transferee as long as it is perfected within 30 days thereafter. Otherwise, such transfer is made on the date of perfection.

The trustee may avoid any transfer of the debtor’s property that was made within 10 years before the commencement of the case if the transfer was made by the debtor to a self-settled trust or similar device, the debtor is the beneficiary of the trust or device, and the debtor made the transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became indebted on or after the date of the transfer.

Non-insider transferees have no liability for preferential transfers made for the benefit of insiders during the period between 90 days and one year prior to the filing of the bankruptcy petition. Non-insider transferees should not be subject to the preference provisions of the Bankruptcy Code beyond the 90-day statutory period. If the trustee avoids a preference made between 90 days and one year before the commencement of the case to an entity that is not an insider, but for the benefit of a creditor that is an insider, the transfer shall be avoided only with respect to the creditor that is an insider.

Transfers to “insiders,” which includes relatives, general partners, and directors or officers of the debtor, made up to one year prior to the filing of a bankruptcy, may be avoided or undone. In addition, the trustee may be able to avoid transfers under applicable state law, which may provide longer time periods. However, a preference cannot be avoided to the extent the transfer was in payment of a domestic support obligation.

West Virginia Chapter 11 Bankruptcy

While the news is full of stories of home foreclosures and personal bankruptcies, businesses are suffering, too. Tighter consumer spending and commercial credit put many businesses in a cash flow crunch or caused some to fail altogether.

Chapter 11 bankruptcy offers debt relief to businesses that are having trouble paying back loans and their obligations. It allows corporations and partnerships to reorganize and restructure their debts and contracts under more favorable terms so they can continue to operate while repaying their creditors.

If you are a business owner who is struggling to pay bills, Chapter 11 bankruptcy allows you to reorganize your business and satisfy debts without liquidating assets or shutting down operations. Since Chapter 11 filers expect their long-term profit to be worth more than the value of their assets after liquidation, creditors often benefit more by giving them the time to repay debts, rather than selling off business assets.

Once the petition for Chapter 11 bankruptcy is filed, an automatic stay goes into effect, putting a temporary halt to all collection activities by creditors. During this time period, negotiations can take place to resolve difficult debt management problems.

If you are the owner of a ocal small or medium-sized business, our bankruptcy lawyers in West Virginia can help with virtually every aspect of the Chapter 11 bankruptcy filing process—including the development of a structured workout for debt repayment.

With our experience in complementary legal practice areas, such as tax and estate planning, business law, and real estate, our West Virginia bankruptcy lawyers can help you understand how filing for Chapter 11 bankruptcy will likely impact key areas of your commercial operation and the bottom line.

Since many of our attorneys have high-level degrees in business, economics, or accounting as well as their Juris Doctor (JD), they can provide informed, insightful advice and counsel on virtually every aspect of your commercial operation. We regularly help our business clients understand the tax effects of bankruptcy and how reorganizing debts can lead to a more successful future. Your Chapter 7, Chapter 11, and Chapter 13 bankruptcy attorneys.

West Virginia Chapter 13 Bankruptcy

When creditors are calling but you cannot repay your debts, it may be time to consider bankruptcy. The federal bankruptcy code provides for different types of bankruptcy relief, each with its own unique requirements.

Gianola Barnum & Jecklin, L.C. is a debt relief agency, and we help our clients file for debt relief under the Bankruptcy Code. Do not be misled by debt consolidation or debt collection agencies that state you do not qualify for bankruptcy. We explain common sense actions you can take to start rebuilding your credit today.

The first step is to determine if you qualify for filing bankruptcy in WV under Chapter 7, which involves the liquidation of most or all of your personal assets to pay what you owe your creditors. Liquidation converts assets, such as your jewelry and investments, to cash—which is used to pay off your debts.

To qualify for Chapter 7, your monthly household income must be less than the West Virginia median income for a household of your size. But if it is more, you may need to consider Chapter 13 bankruptcy, a repayment plan for those earning more than the state median income. Typical Chapter 13 filers have equity in a home or other property as well as regular income. While they can pay basic living expenses, their income does not allow them to stay current on their scheduled debt payments.

With our understanding of bankruptcy laws in WV, we can propose a debt repayment plan that enables you to pay back your creditors over a period of three to five years. With Chapter 13, you will be able to keep most of your property, and your payments may be paid to a bankruptcy trustee for distribution to your creditors.

Since we also have experience in complementary legal practice areas, such as tax and estate planning, business law, and real estate, as well as divorce and family law, our attorneys can help you with virtually all aspects of your bankruptcy filing and explain how it will likely impact other areas of your financial life.

West Virginia Chapter 7 Bankruptcy

For those who successfully file, Chapter 7 gives debtors a fresh start on their new financial life. Individuals, partnerships, and corporations may file under Chapter 7. It is especially beneficial to those with high unsecured debt, such as medical bills or credit card bills. Assets such as your home or car may be exempt.

To qualify for Chapter 7, your monthly household income must be less than the West Virginia median income for a household of your size. But if it is more, you may need to consider Chapter 13 bankruptcy, a repayment plan for those earning more than the state median income. Typical Chapter 13 filers have equity in a home or other property as well as regular income. While they can pay basic living expenses, their income does not allow them to stay current on their scheduled debt payments.

Before filing for Chapter 7 bankruptcy, you must take a means test that determines whether you qualify and complete a required session with a credit counselor.

If your monthly household income is less than the West Virginia median income for a household of your size, you are eligible to file for Chapter 7 bankruptcy. Typical Chapter 7 filers have very few assets, and little to no money left after paying monthly expenses.

Gianola Barnum & Jecklin, L.C. is a debt relief agency, and we help our clients file for debt relief under the Bankruptcy Code. Our attorneys determine if Chapter 7 is the best solution for you and help you through the Chapter 7 filing process from start to finish.

Since we also have experience in complementary legal practice areas, such as tax and estate planning, business law, and real estate, as well as divorce and family law, our attorneys can help you with virtually all aspects of your bankruptcy filing and explain how it will likely impact other areas of your financial life.