Chapter 7 Bankruptcy Information

Matthew Foley

Matthew Foley

Esq. & MBA

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Businesses & Filing Bankruptcy in Tucson

A consumer debtor can file a personal bankruptcy even if engaged in business.  However, the bankruptcy process becomes complex and there are certain inherent risks involved.  Any business debtor that is contemplating a chapter 7 or chapter 13 bankruptcy should seek bankruptcy attorneys that have specific experience in filing such cases.  The bankruptcy code and Arizona’s exemptions do not protect business assets or business income and the businesses are not eligible to receive a discharge.  However, a consumer bankruptcy can eliminate a debtor’s personal liability and many businesses can survive a bankruptcy.

If a business owner is contemplating bankruptcy, the first consideration is whether the business is expected to continue or to be dissolved.  If the business is sustainable, a careful business valuation should be completed.  There are several professionals that provide such services.  The purpose is to determine an estimated liquid value.  Some bankruptcy trustees will look to “goodwill” and “client lists” as settlement chips during bankruptcy.  A debtor’s counsel needs to be able to counter with actual figures.  It helps the client and trustee to have an accurate business valuation.

If the business has a large liquid value, the debtor must be prepared to lose the business or to negotiate a large Rule 1019 compromise with the trustee’s counsel.  If a debtor wishes to keep the business and does not have the funds to settle the trustee’s interest, bankruptcy may not be a viable debt relief option.  Also, if the business in encumbered with debt, a consumer bankruptcy will not discharge the business’s liability.  Both of these considerations may make debt settlement a better option.

If the case is filed, a debtor’s attorney should promptly file a motion to abandon the business.  This will expedite a settlement and limit post-petition issues.  Two common problems arise with business income and exemption issues.  Upon filing, business income becomes property of the estate.  Therefore, a debtor must consider how they are deriving revenue from the business, such as through wages versus dividends.  Post-filing wages are not property of the bankruptcy estate.  Business assets also become property of the estate, but can offset with business debt.  As a word of caution, businesses cannot claim exemptions.

This is a common mistake where a consumer debtor claims a “tools of the trade” exemption for business assets, however, the debtor does not actually own the property.  When the ownership of property is in question, it is helpful to look at business taxes to see if the property has ever been claimed and depreciated.  In addition, if the property has ever been insured under the business policy, it is a good indicator that the business owns the asset, versus the debtor.  A debtor can reclaim ownership through an exchange for value.

Self-employed debtors are often advised to temporarily close their business for purpose of filing bankruptcy.  The business is then opened under a new name after filing.  This path can create fraudulent transfer issues and breach of fiduciary duty concerns.  By closing a business and opening a new one, the debtor inadvertently undermines their present business by transferring business assets (such as tools, computers, client lists, contracts, etc) into a new company without having received reciprocal value.  If the trustee expresses an interest in the business, the debtor may be in a worse position.  Often, it is better to keep the business operating and filing the motion to abandon after commencing the bankruptcy case.

These are some of the more common issues with a business debtor filing bankruptcy.  With careful legal guidance, a business debtor can successfully file bankruptcy and secure debt relief.  The outcome of the case will depend on the case trustee, which attorney is representing the trustee, the type of business, the value of the business, and the timing of filing the case.  It is advisable that a business debtor not attempt to file bankruptcy without experienced counsel.

"An EXEMPLARY Attorney! Dedicated, Caring, Knowledgeable, Experienced. ABSOLUTELY THE BEST!"

 

Mr. Foley and his staff far exceeded my expectations! No words can adequately express my heartfelt appreciation for the exceptional support I received throughout what was surprisingly a very positive, stress-free, and smooth process. I highly, highly recommend Matthew T. Foley!

 

Kate

September 14, 2016

"Your Excellent Choice!"

 

Matt and his team rock !!!!!!!!
They took the stress and worries out of the whole process and made it smooth and stress free. He and his staff are caring, knowledgeable, very organized, honest and affordable. They responded quickly to any questions or concerns I had.

I would highly recommend Matt and his team to anyone who needs a bankruptcy...... Thank you so much

Karina
July 13, 2017

"Caught in a Bind”

 

I was in a real bind and not knowing the law, I contacted the best reviewed bankruptcy lawyer in town. After the consultation I left feeling better about my situation with a much better understanding of the law. The man knows his stuff and is very knowledgeable. I hired him and he did an amazing job. I literally did nothing but answer questions in an honest manor. The staff is a collection of incredible people, who are kind and very nice and understanding towards your situation. Thank you so so much for everything and would recommend the heck out of this gentlemen. Awesome experience.

Jesus
March 6, 2017

"Truly Awesome"

 

Matt and his team rock!!! They took the stress and worries out of the whole process and made it smooth and stress free. He and his staff are caring, knowledgeable, very organized, honest and affordable. They responded quickly to any questions or concerns I had. I would highly recommend Matt and his team to anyone who needs a bankruptcy or debt settlement attorney.

Teresa
October 21, 2016

"Brinda ayuda honesta"

 
Le agradezco a usted y a su equipo de professionales por el apoyo, la guia, comprension y toda la asistencia brindada al lo largo del proceso. Siempre estuvieron ahi para ayudarme, para responder mis preguntas. Gracias al buen trabajo que hicieron pude no unicamente liberarme de mis deudas pero tambien mejoro mi salud, mi bienestar y el de mi familia. No tengo con que pagarle todo lo que hizo por mi. Muchas gracias por todo. Dios lo bendiga a usted y a su equipo y continuen ayudando a nuestra comunidad hispana como hasta ahora... con honestidad y respecto.

Lourdes

August 11, 2017

"Excellent”

 

Mr. Foley handled my chapter 7. After my first meeting with him I instantly felt better about the whole thing. I was stressed about my finances and felt guilty for even considering a bankruptcy. I felt like a total failure. Mr. Foley was able to help me see that it was the right business decision and was also able to help me by pointing me to resources for a redemption loan on my vehicle. If you are considering a bankruptcy attorney, I would recommend you consult with Mr. Foley.

Client #1
July 18, 2017

"Very helpful even though not client (yet)”

 

Matthew represented us at a Trustee meeting when our Phoenix attorney could not be present. He was knowledgeable and helpful. In addition, when my existing attorney became "disengaged", we contacted Matt and he spent a lot of time helping us understand some issues we were having. He was supportive, helpful, and gave excellent advice even though we were not his clients. I highly recommend him and he will be my first call for any future legal issues.

Doug
May 23, 2017

"A saving grace!"

 

I was literally days away from having my paychecks garnished. Not knowing what to do anymore, I decided to look for an attorney and researched all around Tucson. I came across reviews of Matt's firm on multiple sites and saw he was the highest rated and most reviewed. I decided to go in for my consultation and I couldn't hire him quick enough. Halee was awesome in helping me as well. I submitted all of my paperwork in less than 24 hours and 3 days later, I filed. I was so sick to my stomach in the stress of the debts I had. I was quickly relieved. Matt made me feel comfortable and told me just to relax. I think we are all scared of the unknown and what lies behind Bankruptcy. But I cannot speak highly enough of the positive experience I had with Matt and his team. Thank you so much, from the bottom of my heart. Finally, there is light at the end of the tunnel.

 

Melanie

April 27, 2017

"Matt is fearless and unflappable...”

 

Finding Matthew Foley and his team was like finding cool, clear water in the desert. After wading through several overworked, confused huckster attorneys in the bankruptcy area; finding Matt was like finding an angel. He was not put off by complexities in our case and he was always a calming, soothing commander in the midst of a difficult situation. He was a great strategist and his professionalism was amazing. He was incredibly patient to explain and reassure us of the best course of action. I have been exposed to many attorneys in my life but none have ever impressed me the way Matt Foley has. Even his staff, Halee, Alysha and Austin maintain extraordinary standards of professionalism while always supporting Matt in his mission: to serve and reassure the fiscally challenged throngs that enter through Matt's door hoping for knowledge and assistance. I would give Matthew Foley the highest possible recommendation as the best Bankruptcy Attorney in Arizona. Five Stars are not enough to capture what he does for the people of Tucson, Arizona. I would also recommend him for any position that requires competence, calm professionalism and uncanny skills, knowledge and competency. Matt is fearless and unflappable. Thanks again, Matt!

John

December 12, 2016

"Excellent choice for bankruptcy"

 

Matt helped get us a chapter 7 bankruptcy in a quick and professional manner. He explained the process step by step and allowed us from feeling overwhelmed to relieved. He stopped the garnishments from continuing and I even got my garnishment checks back. if I ever needed more help in the future, I would go back to him and recommend him to anyone that needs help with debt.

Rebecca

May 25, 2017