A California real estate developer recently filed for Chapter 7 bankruptcy after defaulting on a sizeable loan. According to court documents, the prominent developer has a lot of assets but also a high level of debt. The court estimated the man's assets at $3.2 million and debts at $136 million. The problems, however, began three years ago with a $17 million loan.
The loan was obtained for a housing project that was never built. After defaulting on the loan, it was purchased, and the new creditor obtained a judgment against the man. The parties appeared to reach a settlement agreement, but then the creditor backed out. As a result, the developer filed for Chapter 7 bankruptcy protection while he attempts a fresh start.
For more people, the debt carried may not rival that of the developer, but debt can nonetheless be weighty. If a person owes any significant amount to creditors, Chapter 7 bankruptcy might be a solution. Chapter 7 is probably the most common form of personal bankruptcy available. It allows debtors to stop creditors from harassment while much of the existing debt is discharged.
However, it is important to note that some exceptions exist. Not all debt can be discharged in bankruptcy. For example, student loans, child support and alimony will usually survive bankruptcy intact, and the debtor will be required to continue payment. Other types of debt cannot be discharged under Chapter 7, but can be discharged under Chapter 13.
Thus, it is important for residents in the San Diego area to weigh the pros and cons of each type of bankruptcy. For debtors looking for a fresh start, such an important decision can be made easier with the help of an experienced bankruptcy attorney.
Source: sacbee.com, "Sacramento developer Kolokotronis files for Chapter 7 bankruptcy," Bob Shallit, Feb. 4, 2012