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When Should I Consider Filing for Bankruptcy?

Written by: Dustin Bower

Article Overview: “A person is insolvent whenever the aggregate of his property is not sufficient to pay his debts” – First State Bank v. Sibley County Bank, 105 N.W. 485

When Should I Consider Filing for Bankruptcy?

"A person is insolvent whenever the aggregate of his property is not sufficient to pay his debts" - First State Bank v. Sibley County Bank, 105 N.W. 485

What is Bankruptcy?

The bankruptcy system was created to allow people with too much debt the opportunity to have a fresh start. When you file for bankruptcy, you choose to operate under either Chapter 7 or Chapter 13 of the Bankruptcy Code.

Chapter 7 is for those that are really struggling, and will forgive almost all of your debts in return for almost all of your property being sold to pay off your creditors, although you do get to keep the property subject to exemptions.

Chapter 13 is for those in a slightly better financial position and allows you to work with the court to repay as much of your debts as you can. Once that debt repayment period is up, the remainder of your debt is forgiven.

How do I know if I should file for Bankruptcy?

The easiest way to determine if you need to file for bankruptcy is to look at your monthly income. If you make less each month than you owe in debt, then you are insolvent by definition. If you are making an effort in good faith to repay your debts, but do not make enough to pay them back, then you should contact a bankruptcy attorney and go through your options.

Other things to consider: Have you been informed that your house is in foreclosure? Have you been threatened with vehicle repossession? Have you received notice of the filing of a lawsuit against you to collect a debt? Are you being harassed on a regular basis by creditors?

Remember that bankruptcy is designed to help you pay off your creditors as much as possible and to allow you a fresh start. You are allowed to keep enough of your assets to assure that you will not become destitute. However, you should not always look to bankruptcy as your first resort.

What else should I know before I file?

Be warned: the purpose of the Bankruptcy Code is to provide a debtor with a fresh start. It is not designed to preserve that debtor's extravagant lifestyle. If you are spending well beyond your means and are not making proper efforts to repay your creditors, then the court may find the debts to be fraudulent. Fraudulent debts are not discharged by the bankruptcy proceedings and you will still be liable for them.

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Article Tags: aggregate, assets, bankruptcy attorney, bankruptcy code, bankruptcy system, chapter 13, chapter 7, creditors, debt repayment, debts, financial position, first state bank, foreclosure, fresh start, good faith, property subject, remainder, repayment period, sibley county, state bank



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Information about doing franchise business in China - CHINA’S FRANCHISE LEGAL SYSTEM Introduction Franchises has a history of more than one hundred years in foreign countries, now it has developed to be a mature business mode, and it is widely used in many countries, especially the developed ones. Recently, franchises has been developing fast in China, covering more than sixty industries and trades such as catering, retailing, clothes-washing, indoor decorations and gym. However, the market order of franchises is chaotic in some industries and areas. There are also some illegal and criminal activities under the guise of franchises. Under such circumstances, several important laws have been promulgated to regulate the commercial franchising activities. Applicable Legislation The main legislative provisions governing the commercial franchising in the PRC are: the Measures on Administration of Commercial Franchises; and the Measures on Administration of Archival Filing of Commercial Franchises; and the Measures on Administration of Information Disclosure of Commercial Franchises Qualification for Franchisors According to the laws, the franchisors as those enterprises who own such business sources as registered trademarks, enterprise logos, patents and proprietary technology, and license these business sources to franchisees. Firstly, the franchisors shall be enterprises, excluding other economic organizations and individuals. Secondly, the trademarks which can be licensed to franchisees shall be registered trademarks. According to the Trademark Law, the trademarks, whether registered or not, are protected under the laws, though there is difference in the vigor and extents of protection. It seems that the Ministry of Commerce has restrictions in recognizing trademarks, since it only provides “own trademarks to be licensed to others” at large, which causes chaos in practice. In the cases relevant to franchising disputes which we provided legal service to, all of them involve the situation that the franchisors granted licenses of non-registered trademarks or the trademarks which were in application to others, and when there was infringement on trademarks, the franchisors were unable to prevent infringement on trademarks. Then the interests of the franchisees could not be realized. What’s more, franchising activities with non-registered trademarks also, to some extent, encourage commercial frauds. Thirdly, the logos, patents and proprietary technology of enterprises are included in the business sources to be licensed to others for the first time, which enlarges the application scope of franchises and will improve the development of franchises. Requirements to be Met in Carrying on Franchising Activities In addition to the condition that only the enterprises will be allowed to carry on franchising activities referred to above, the franchisors shall also have mature business modes, and are able to provide business guidance, technology support and training. The enterprises which copy the manuals, websites and enlisting documents of others, and have no service abilities for providing business guidance, technology support and training shall be excluded. What needs pointing out is that even these enterprises that are allowed to carry on business may face with the suits claiming them for unfair competition and infringements on intellectual properties. In addition, the Measures clearly request that the franchisors shall operate at least two directly operated shops, and the period of operation shall be more than 1 year, which aims to prevent frauds by the way of franchising. Information Disclosure Requirements and Regulation on Franchisors Information disclosure system is the core system of franchising. The laws provides that the franchisors shall establish and implement a perfect information disclosure system, and provide the relevant information and franchising contracts in written form, at least thirty days before execution of franchising contracts. It also sets out the specific provisions on the information which shall be provided by franchisors, including the basic conditions and commercial reputation records of the franchisors and their legal representatives, business sources owned by franchisors, abilities of franchisors to provide service to franchisees and management and supervision on business of franchisees, franchisee fees and the payments, and budgets for investment in franchising shops. To the franchisors that violate these provisions, the authorities in charge of commerce will order them to rectify, charge penalties and make public statements. Archival Filing and Public Announcement Systems To protect the franchisees’ lawful rights and interests, considering the asymmetric information between franchisors and franchisees, in addition to intensifying information disclosure requirements and regulating the activities of franchisors, the Measures also bring in the archival filing and public announcement systems. The Measures provides that the franchisors shall make a filing with the commerce administrative department within 15 days after the execution of franchising contracts for the first time. Anyone who intends to engage in any commercial franchise activities within a province, autonomous region, or municipality directly under the Central Government shall go through the archival filing formalities in the commerce administrative department of the people’s government of the province, autonomous region, or municipality directly under the Central Government where the franchisors are located. Anyone who intends to engage in any commercial franchise activities beyond a province, autonomous region, or municipality directly under the Central Government shall go through archival filing formalities in the commerce administrative department of the State Council. Any franchisor having been engaging in franchise activities before May 1, 2007 shall apply for archival filing at the commercial administrative department. The Ministry of Commerce has established the national network for archival filing work relating to commercial franchise. Any franchisor shall go through the archival formalities through the government website. The general public may obtain the following information through the government website of the Ministry of Commerce: (1)The registered trademark(s), enterprise mark(s), patent(s), know-how and other business resources of the franchisor; (2)The franchisor’s archival filing date; (3)The location of the legal business place, contact information and name of the legal representative of the franchisor; and (4)The location of the business place of the franchisee(s) within China. The authorities in charge of filing will cancel the archival filing if there is any following activities of franchisors, and make public announcement on the government website: (1) the business licenses of the franchisors have been withdrawn by the registration administrative authorities for illegal business; (2) the authorities in charge of filing receive judicial suggestion letter on cancellation of archival filing from the judiciary for illegal business by franchisors; (3) the franchisors conceal the relevant information or provide false information, which has been proved; (4) the franchisors carry on cancellation by themselves. In addition, the illegal activities of the franchisors will be announced to the public. By Erex Chen, a Chinese lawyer based in Shanghai.


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