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Bankruptcy No Laughing Matter

Author: Alexander Littlejohn/ Date: August - 9 - 2010

Dick Smothers is an American actor, comedian, composer and musician who has probably been best known to most of us as being half of the comedy team of the Smothers Brothers. Born in New York City, he grew up in southern California and later attended San Jose State University. The Smothers Brothers appeared on numerous television shows through three decades of entertainment. Enjoying financial success for most of this time, Smothers according to news articles, recently filed for bankruptcy in Florida where he and his wife own property. He listed $2 million dollars in assets and $2.8 million dollars in debts. Dick Smothers may be famous for his humor, but bankruptcy is no laughing matter.

Bankruptcy can happen to anyone whether they are good at what they do or even famous like Dick Smothers. Anyone can be forced into bankruptcy if they cannot pay their creditors on time, regardless of the reason. Therefore, filing for bankruptcy is not always a choice you make, but others might make it for you. There are basically two forms of bankruptcies- voluntary and involuntary. Although rare, an involuntary bankruptcy occurs when a creditor legally forces bankruptcy proceedings onto a debtor. The greatest majority of bankruptcy legal proceedings are of the voluntary variety.

As a society, we have come a long way since the days of debtor prisons and states. The Constitution provides for our protection against those antiquated ways when it gave Congress the power to legislate bankruptcy law making the primary laws governing bankruptcy federal. State laws supplement the federal laws by honing out some of the necessary details. The laws have been designed to protect both creditor and debtor making bankruptcy a legal proceeding designed to allow the honest person to work their way out of a bad financial situation.

An individual, when having to or forced to file for bankruptcy, has two types of bankruptcy options:

  1. A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A trustee that is appointed by the court will gather and sell your non-exempt property, and he will use the proceeds from the sale in order to pay your creditors. Most chapter 7 cases are “no-asset” cases, meaning you do not have any non-exempt property for the trustee to sell.
  2. A chapter 13 bankruptcy, known as the wage earner’s plan, is the second bankruptcy available to individuals. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During the plan, creditors may not start or continue collection proceedings.

Facing a bankruptcy because of divorce, foreclosure, credit card pressure, sudden loss of income, health issues, or any other reason is no laughing matter. To determine if you need to file a bankruptcy or which bankruptcy would be appropriate for your particular situation, complex bankruptcy laws and good common sense should dictate that you might need the services of a bankruptcy attorney. If you determine you are in need of relief from the stress associated with debt and you live in or around the the area of San Jose, California, contact us today at www.BankruptcyHome.com . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

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