According to news articles and court documents, Movie Gallery Inc. has filed bankruptcy for the second time in less than three years. The Wilsonville, Ore.-based movie rental chain said it will immediately close 760 of its 2,415 stores in a bid to remain afloat as overwhelming debt and mounting operating losses reek havoc on its balance sheet. Movie Gallery Inc., parent of Hollywood Entertainment, filed for protection from creditors under Chapter 11 in U.S. Bankruptcy Court in February of 2010. In its bankruptcy petition, Movie Gallery estimated its assets between $10 million and $50 million and having an estimated $500 million to $1 billion in debt.
Bankruptcy can happen to individuals and businesses for a variety of reasons. Regardless of how good your intentions are, bankruptcy is no respecter of persons. You can be famous, infamous, rich, or poor and bankruptcy can still find you. There is no shame going bankrupt as it can literally happen to anyone and at anytime. In the United States, when you find yourself bankrupt, there are legal proceedings you can use to protect yourself from creditors. It use to be that your creditors could put you in prison for failing to pay your bills, but today, filing for bankruptcy is a legal proceeding that is designed to protect both creditor and debtor and to allow the honest individuals or businesses to work their way out of a bad financial situation. This legal proceeding is covered by the Constitution of the United States. As a society, we have come a long way since the days of debtor prisons and states. The Constitution provided for our protection against those antiquated ways when it gave Congress the power to legislate bankruptcy law making the primary laws governing bankruptcy federal.
A business can file a Chapter 7 or a Chapter 11. An individual can file a Chapter 7 or a Chapter 13.
A Chapter 7, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A chapter 13 bankruptcy is the second bankruptcy available to individuals and is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. A chapter 11 is very similar to a Chapter 13 but the main difference is that a trustee can run the daily business operations of the business. In Chapter 11, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business.
If you are an individual, have an income and qualify for a chapter 13, there are certain advantages for filing one. These advantages are: to save your home from foreclosure; to reschedule secured debts; to provide protection for co-debtors; to consolidate your loans under one plan; to keep non-exempt property; to extend certain tax obligations, student loans, or other such qualifying debts; and to qualify for bankruptcy relief. Filing a chapter 7 will not afford you these various opportunities listed. So, if you have assets you want to keep, you currently have an income, and you want to try to pay your creditors as much as what is reasonable, you may want to consider filing a chapter 13 bankruptcy. But, if you do not have many assets, you do not have a mortgage, you just want to get out from under the burden of your debts, and you qualify, you may want to consider filing a chapter 7 bankruptcy.
Whether you are a business or an individual, there is no easy way out of a bad financial situation. They can happen to anyone, and the way out of them amounts to a lot of hard work and determination to overcome. Maybe you have found yourself in a difficult financial situation, and you are considering bankruptcy as an option. If this is the case, you are going to need a bankruptcy lawyer to properly help you understand how the complex bankruptcy laws may apply in your situation.
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