FAQs

Why do Chapter 11 cases get converted to Chapter 7?

Chapter 11 is a procedure for businesses and individuals with sophisticated financial situations. Sometimes companies and individuals are losing money and they’re losing value in their assets and that’s at the expense of creditors. When that happens a bankruptcy court will say, no you don’t have the right to continue to reorganize at the expense […]

I owed somebody money and they wrote it off. Do I have to pay tax on the amount of money that they discharged?

Well, the answer to that question is maybe. It depends on a few different circumstances. The income that you’re worried about is called discharge of indebtedness income, and under the Internal Revenue Code, that’s considered income to you, which can be taxed. Under the right circumstances though, you can get out from under that obligation. […]

What is a disclosure statement?

I’m going to answer the question, “what is a disclosure statement?” Disclosure statement is part of the Chapter 11 process, where businesses and individuals with sophisticated financial situations are trying to reorganize their affairs. A plan of reorganization is the document where the debtor describes how the creditors are going to be treated. A disclosure […]

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