ASU LAW CLEMarch 29, 2013

BANKRUPTCY: BASIC CONCEPTS

AND APPLICATIONS

BANKRUPTCY: PROS AND CONS FOR INDIVIDUALS

AND SMALL BUSINESSES

UPSIDE DOWN REAL ESTATE: STRATEGIC DEFAULT OR BANKRUPTCY?

Presented by Mark A. Winsor, Esq.

Mark takes a creative approach to the practice of law as a result of his unique business background prior to law school in 1997. Mark has been an entrepreneur for over 30 years and has created, developed and directed businesses in financial services, international trade and distribution and professional services. Since becoming an attorney, Mark gained experience in Business Law, Foreclosure and Bankruptcy Law, Real Estate Law, Estate Planning and Asset Protection. For over 8 years Mark has been a talk show host on various radio stations and a frequent speaker at continuing education and seminar events for attorneys, real estate agents and other professionals.

Mark A. Winsor, Esq.Winsor Law GroupLocation: 1237 S. Val Vista Dr.

Mesa, AZ 85204Phone: (480) 505-7044Fax: (480) 240-5936Email: mwinsor@winsorlaw.com

BANKRUPTCY: BASIC CONCEPTS AND

APPLICATIONS

FOR MORE DETAILS:

WWW.WINSORLAW.COM

CLICK “ARTICLES” THEN ASU CLE

PURPOSE:

Balancing

Protection of debtors

Fair treatment of creditors

(by priority).

SUMMARY OF MOST FREQUENTLY

USED CHAPTERS

• CHAPTER 7: LIQUIDATION [FRESH START]

QUALIFYING

[MEDIAN INCOME AND MEANS TEST RULES]

PROTECTING ASSETS

(EXEMPTIONS AND PRE-BANKRUPTCY PLANNING).

IF ASSETS TO DISTRIBUTE:

TO APPROVED CREDITORS BY PRIORITY.

Median Income

Household size Income Limit

1 42,691

2 55,479

3 58,292

4 63,201

Each additional 7,500

CHAPTER 11REORGANIZATION FOR BUSINESSES AND “OTHERS”

HELPING BUSINESSES TO SURVIVE. IF IT WON’T “WORK” THEN CONVERT TO 7.

PROTECTION FOR INDIVIDUALS

WHEN CHAPTERS 7 AND 13 DON’T “WORK”.

DEBTOR IN POSSESSION: MORE FLEXIBILITY; HIGHER LEGAL FEES /COSTS.

FAIR TREATMENT OF CREDITORS BY CLASSES.

PLAN CONFIRMATION. CREDITOR VOTING, CREDITOR PRIORITIES AND OTHER ISSUES.

CHAPTER 13: REORGANIZATION FOR INDIVIDUALS

QUALIFYING. NOT TOO MUCH DEBT.

SUFFICIENT INCOME.

PROTECTING ASSETS (PAY PRIORITY AND SECURED CREDITORS AND

MORE TO UNSECURED THAN THEY WOULD GET IN A 7)

PLAN CONFIRMATION: 3 TO 5 YEAR PLAN.

CRAM DOWNS.

LIEN STRIPPING.

BANKRUPTCY:

PROS AND CONSFOR

INDIVIDUALS

AND

SMALL BUSINESSES

WEIGHING IN ON:

EMOTIONS

PRACTICAL MATTERS

MORAL ISSUES

FINANCIAL REALITY

CONS:

CREDIT ISSUES. (MORE PERCEPTION THAN REALITY)

MORAL AND SELF ESTEEM ISSUES.OTHER ALTERNATIVES, SUCH AS DEBT NEGOTIATION, DEBT

COUNSELING, DEBT RESTRUCTURE MAY BE LESS INTRUSIVE

INTO DEBTOR’S PERSONAL FINANCIAL AFFAIRS.

FAMILY AND FRIENDS WHO ARE ALSO CREDITORS WILL

BE NOTIFIED.

PUBLIC RECORDS. CREDIT BUREAUS FOR 10 YEARS

AFTER DISCHARGE; FOREVER ON SOME APPLICATIONS.

CONS:

PUBLIC RECORDS. CREDIT BUREAUS FOR

10 YEARS AFTER DISCHARGE;

FOREVER ON SOME APPLICATIONS.

TRUSTEE DISPUTES(E.G. OVER EXEMPTIONS, FRAUDULENT

TRANSFERS, PREFERENTIAL PAYMENTS, AND MORE).

PROS:

FASTER FRESH START THAN DEBT NEGOTIATION OR ATTEMPTS TO

RESTRUCTURE OUTSIDE BK.

SECTION 525 PROTECTION.

MORE CERTAIN PLANNING ABILITY.

SOMETIMES THE ONLY OPTION TO AVOID GARNISHMENT AND

AGGRESSIVE CREDITOR TACTICS.

MANY TIMES BK IS THE BEST OPTION TO REDUCE STRESS IN

FAMILY AND PRESERVE RELATIONSHIPS AND HEALTH.

MANY TIMES A FINANCIAL NO-BRAINER.

UPSIDE DOWN REAL ESTATE: STRATEGIC DEFAULT

OR BANKRUPTCY?

ANTI-DEFICIENCY STATUTES

A.R.S. §33-814(g).

IF

PROPERTY IS A SINGLE OR DUAL

DWELLING ON 2 ½ ACRES OR LESS

ANDTHE FORECLOSURE IS BY TRUSTEE SALE.

A.R.S. §33-729.

IFPROPERTY IS A SINGLE OR DUAL DWELLING

ON 2 ½ ACRES OR LESS

ANDTHE LOAN WAS TO BUY THAT PROPERTY

(PURCHASE MONEY).

DWELLING; NOT PRIMARY RESIDENCE.

REFINANCING AND BIFURCATION ISSUES.

DEBT FORGIVENESS TAX. EXCEPTIONS: INSOLVENCY AND BANKRUPTCY.

NON-RECOURSE ARGUMENT.

NO NEED FOR BANKRUPTCY IF PROTECTED BY

ANTI-DEFICIENCY STATUTES

AND INSOLVENCY RULES.

SOMETIMES BANKRUPTCY IS NOT FEASIBLE

BECAUSE OF QUALIFYING ISSUES OR ASSET

PROTECTION ISSUES.

SOMETIMES BANKRUPTCY IS NOT DESIRABLE

BECAUSE OF EMOTIONAL, PRACTICAL OR MORAL

REASONS.

SOMETIMES BANKRUPTCY IS THE BEST WAY

(OR ONLY WAY) TO GIVE THE DEBTOR

ADEQUATE RELIEF (FINANCIALLY/EMOTIONALLY).

FOR MORE DETAILS AND

SUPPORTING INFORMATION:

WWW.WINSORLAW.COM

CLICK “ARTICLES” THEN ASU CLE