Declaring Bankruptcy Can Protect Your Future

Filing For BankruptcyA few months ago, Forbes estimated that Curtis James Jackson III (also known as the rapper 50 Cent) was worth $155 million, one of the richest rappers in the world. Fiddy appears to be rolling in the dough, bringing home income through music, acting, producing, his partnership with Effen Vodka, SMS headphone as well as stake in Frigo underwear. Why then, would he file for Chapter 11 bankruptcy protection you (and many others) might wonder? Declaring bankruptcy can protect your future.

50 Cent Files for Chapter 11 Bankruptcy

When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.

Jackson filed in a Connecticut court for a Chapter 11 bankruptcy which is mainly filed by businesses (such as General Motors, Carmike Cinemas and recently A&P) to allow them to restructure their finances through a repayment plan approved by the Court. He filed just days after a ruling came through ordering him to pay the court $5 million to his rival Rick Ross’ ex-girlfriend, Lastonia Leviston, who sued him for posting a sex tape online in an alleged attempt to embarrass Ross. 50 Cent pointed out to E! News that “Walt Disney had filed for bankruptcy before. Donald Trump has filed bankruptcy. It means you’re re-organizing your finances. But it does stop things from moving forward that you don’t want moving forward.”

Differentiating Between Chapter 7 and Chapter 13 Bankruptcy

A Chapter 7 bankruptcy filing is sometimes called a “liquidation action” and would liquidate assets and divide them among remaining creditors in a one-time payment. If the income is above statutory limits, the debtor will not be permitted to file a Chapter 7 petition but he or she may be eligible to file a Chapter 13 petition. Usually someone who does not file a Chapter 7 bankruptcy will file for a Chapter 13 bankruptcy, which allows the debtor to repay their debts through a repayment plan similar to the method of repayment used in a small business Chapter 11 bankruptcy.

But, it’s important to note that bankruptcy (whether Chapter 7 or 13) does not wipe out all debts. You will still have to pay off your student loans, any money owed for child support or alimony, any fines or penalties for violating the law (such as traffic tickets, DUI, or criminal restitution), as well as recent income taxes and other non-dischargeable debts.

Bankruptcy can Provide a Fresh Start

Filing allows a debtor, including Mr. Jackson, to reorganize their financial affairs and protect future business interests. The rapper’s attorney made a statement to Billboard, “This filing for personal bankruptcy protection permits Mr. Jackson to continue his involvement with various business interests and continue his work as an entertainer, while he pursues an orderly reorganization of his financial affairs.”

This fresh start allows an individual or a business to obtain help with whatever trouble caused them to consider to file for bankruptcy. Most of us are not in 50 Cent’s situation but rather experiencing hardship due to medical bills or an unexpected job loss. Whatever the reason, filing is your legal right given to you by the US Constitution and as a result, view it as an opportunity for a new beginning rather than feeling embarrassed or guilty.

Call Villani & DeLuca Today for a Free Initial Consultation

If you are unsure whether or not you are eligible for a Chapter 7, Chapter 11, or Chapter 13 bankruptcy filing, call a NJ Bankruptcy Lawyer at Villani & DeLuca, P.C. today at 888-389-9533 for a free initial consultation. Villani & DeLuca Of Counsel attorney Robert H. Johnson, Esq. will help you formulate a plan to return to good financial health.