Financial disaster can strike with little forewarning. Catastrophic medical bills, divorce or death of a spouse may force an individual to make a decision to seek protection under federal laws. Stout, Farmer & King is here to guide you or your business through the stormy waters of financial disaster and back onto solid ground.

Stout, Farmer & King concentrates its practice heavily in bankruptcy related matters. Our legal team represents debtors, creditors, creditors’ committees and trustees. We have extensive experience in representing both debtors and creditors in Chapter 11 reorganizations.

Chapter 7
Chapter 13
Chapter 11
Chapter 12

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a form of bankruptcy available to all individuals, corporations, and partnerships. There is no minimum or maximum amount of debt that you can seek to discharge in a Chapter 7.

Chapter 7 is a complete discharge of all debts that you owe with certain exceptions. Many times Chapter 7 is appropriate if you are dealing with the following issues:

Creditor harassment
Wage garnishment
Collection lawsuits
Overwhelming unpaid bills
Repossession or foreclosure

Generally, when filing for Chapter 7 bankruptcy, you are able to retain or keep all of your personal belongings. In many cases, the individual filing Chapter 7 is allowed to keep their home, their vehicles, and all of their household items. However, this varies on a case-by-case basis. The common myth is that because you are filing bankruptcy, you have to lose your home, and that is not always the case.

One common advantage to filing Chapter 7 is relief from creditor harassment. The date that a Chapter 7 bankruptcy is filed, the creditors are required to immediately STOP all collection efforts against you. They cannot call you, call your employers, send you letters, or garnish your wages.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a debt restructuring plan where a person attempts to pay back all or part of his/her debts based on what he/she has the ability to pay. Chapter 13 has several advantages, and it can help you do the following:

Immediately stop a foreclosure or repossession action against your home or automobile
Stop creditors from harassing you or garnishing your wages
Significantly reduce the amount of your monthly payments

When you file a Chapter 13, all of your creditors cannot take any further collection action against you, and once your case is confirmed or “approved,” the creditors must abide by the repayment terms that the Bankruptcy Court assigns. Typically, all of your debts would be rolled into one payment, and you would make one payment each month to the Bankruptcy Court. The Bankruptcy Court would then decide which creditor gets which portion of the payment.

The main advantage of a Chapter 13 is that the amount that you have to pay is based upon what you have the ability to afford. It is not based upon how much you owe or what your creditors think you should have to pay.

This firm has filed many Chapter 13 cases over the last several years, and it has assisted many clients in stopping foreclosure actions so that they could keep their homes. In a Chapter 13, just like in a Chapter 7, you are usually able to keep your home, your vehicle, and your personal possessions.

Many individuals file a Chapter 13 because they are not eligible to file a Chapter 7 due to certain income requirements. This means that if your income is above a certain level, you may not be able to file Chapter 7, and a Chapter 13 may be your only option. However, this firm’s experience has been that the payments allowed under a Chapter 13 plan are significantly less than the clients had already been paying, and it gives the clients breathing room with their finances going forward.

Here at Stout, Farmer & King, we understand that filing bankruptcy is a very difficult decision. We work individually with each client to ensure that we have recommended the best course of action to them. Please feel free to contact our office at (270) 443-4431 to speak with someone about your situation.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is a form of bankruptcy reorganization available to individuals, corporations, and partnerships. Unlike Chapter 13 bankruptcy, it has no limits on the amount of debt. It is the usual choice for large businesses seeking to restructure the debt and continue normal business operations.

The debtor is usually allowed to maintain possession of its assets and operate the business under the supervision of the Court and for the benefit of creditors. The debtor is given a period of time to make a repayment proposal to its creditors.

The Chapter 11 bankruptcy plan must be voted on by “approved” creditors. A certain percentage of the creditors must vote in favor of the plan for it to be confirmed or approved.

A Chapter 11 bankruptcy plan is confirmed only upon the affirmative vote of the creditors, who are then divided by the plan into classes based on the characteristics of their claims and whose votes are function of the amount of their claims against the debtor. If the debtor cannot get the votes to confirm a Chapter 11 bankruptcy plan, the Court could still “cram down” the plan on credits if certain conditions are met.

Chapter 11 is probably the most flexible of all the chapters, and it is the hardest to generalize about. Its flexibility makes it generally more expensive to the debtor.

Individuals usually reorganize under Chapter 13 bankruptcy, which offers a streamlined plan at modest cost that allows the individual to keep possession of their assets, unless their debt is over a certain level.

Stout, Farmer & King has been involved in more Chapter 11 bankruptcy cases in the Western District of Kentucky than any other firm in the last ten years.

Chapter 12 Bankruptcy

Chapter 12 of the Bankruptcy Code was enacted in 1986, specifically to meet the needs of financially distressed family farmers. The primary purpose of this legislation was to give family farmers facing bankruptcy a chance to reorganize their debts and keep their farms.

In tailoring chapter 12 to meet the economic realities of family farming, this law has eliminated many of the barriers that family farmers had faced when seeking to reorganize successfully under either chapter 11 or 13 of the Bankruptcy Code. For example, 12 is more streamlined, less complicated, and less expensive than chapter 11, which is better suited to the large corporate reorganization. In addition, few family farmers find chapter 13 to be advantageous, because it was designed for wage earners who have smaller debts than those facing family farmers.

Stout Farmer & King, PLLC has succesfully represented a number of family farmers in restructuring their debts and keeping their farms. Please contact us for more information.