Legal Options For Financial Distress

Dean Langdon, Attorney for the Delcotto Law Group, gives us advice for financial distress on today's Ask The Expert.

C1 3 group in downtown lexington.

Dean, thank you so much for joining us today.

Dean- attorney: you're welcome, lisa.

Good to have you.

Thanks for having us.

Lyssa- host: well, thank you.

And you know, today's topic is really important, financial distress.

In today's environment, especially with covid-19 and everything that's been going on in the current events, a lot of people are in financial distress.

Dean- attorney: they are.

Lyssa- host: so let's talk about that.

In particular, let's say that i'm a business and i'm struggling and i've decided that i need to close my business.

How can bankruptcy help me with that?

Dean- attorney: well, bankruptcy can help you with that, lisa, but a lot of times for a small business is just more time and expense than it's really needed.

And it may be easier to close the business.

There's a chapter 7 bankruptcy that would sort of consolidate everything for a business where a trustee would sell any assets.

And if there's any money pay creditors, but usually there aren't any assets to sell, and so it's better sometimes just to close the business.

Lyssa- host: right, right.

Now, what if i am struggling, but i feel like i might be able to turn things around if i just had a little bit more time.

Can bankruptcy help with that?

Dean- attorney: it sure can.

And people always want to keep that business going, and that's the right thing to do.

But there's a bankruptcy called chapter 11 that allows a business to reorganize and will buy that business some time, it stops creditors from collection efforts for a brief period of time.

And you put together a plan on how you're going to pay your creditors back.

You can restructure some of the notes as far as how much you pay, how long you pay them for.

And it's meant to let a business get back on its feet, keep people employed, keep that business open, and for a big enough business it does that very well.

Lyssa- host: good.

Very good.

Now, what if i have been unemployed for a while and i have a substantial amount of debt.

If a person is in that situation, how can bankruptcy help them?

Dean- attorney: a bankruptcy can help that individual by either a chapter 7 will get rid of most of your debts, not all of them.

And it gives you what we call a fresh start.

And so you get to start your economic life over again.

There's another bankruptcy, chapter 13 that would let somebody sort of restructure their personal debts.

It will help you stay off of foreclosure or pay taxes over time, but you've got to have an income to do that.

So there's also a special chapter 12 for farmers to reorganize their farm businesses, which is sort of like chapter 13 for farmers.

Lyssa- host: oh, nice.

I know because a lot of times there's kind of a stigma.

I guess there's a fear when people are in a situation like that, that it can affect their credit for the rest of their lives.

Does it really do that?

Dean- attorney: it does it for seven to 10 years, but that's not the rest of your lives, and actually it'll improve your debt credit ratio and it actually ends up helping some people's credit scores.

Lyssa- host: fantastic.

Well, dean, thank you so much for being with us today.

We really appreciate it.

Dean- attorney: it's been great.

Thanks for having us.

Lyssa- host: mm-hmm .

Lyssa-host: hey guys, we are here in downtown corbin for our hometown