Most people don’t think of a Chapter 11 reorganization bankruptcy as a “consumer bankruptcy.” Almost everyone that meets with our preeminent bankruptcy lawyers in Phoenix AZ, Lawrence ‘D’ Pew, has one common pre-conception about Chapter 11. The preconception being that Chapter 11 is only beneficial to corporations and large businesses. “That is simply not true,” says Mr. Pew, bankruptcy attorney, “in Arizona, many individual debtors with real estate holdings could benefit greatly by filing under Chapter 11.” Filing for relief under Chapter 11 is more complex than with other chapters of the U.S. Bankruptcy Code, but an experienced Pew Law Center bankruptcy attorney in Arizona will know exactly how to protect the debtor in possession’s interest at every step in the process.
Bankruptcy Attorney in Arizona Explains Single Asset Real Estate
Chapter 11 has a unique provision regarding “single asset real estate,” or SARE, that is owned by the debtor. Under 11 U.S.C. § 101(51B):
“(51B) The term “single asset real estate” means real property constituting a single property or project, other than residential real property with fewer than 4 residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental thereto.”
Before the Chapter 11 petition is filed, our bankruptcy attorney in Arizona at the Pew Law Center, PLLC, will apply the following factors to determine whether the real property should be considered an SARE:
• Is the real property a single property or project?
• Is the asset residential property with less than four units?
• Does the asset generate substantially all of the debtor’s gross income?
• Is the debtor a family farmer?
• Is the debtor’s business restricted to operating this single asset?
According to Lawrence ‘D’ Pew, bankruptcy attorney: In Arizona and in other states, the bankruptcy courts have held that certain property developers, home builders, commercial landlords, and residential landlords with more than four units are SARE debtors.
Why Our Bankruptcy Attorney in Arizona Determines SARE Status in Advance
A single asset real estate debtor may be more vulnerable to a bankruptcy creditor’s action in one significant way. SARE debtors have less time to file a reasonably confirmable Chapter 11 plan, or must start making payments to creditors to stay out of default.
Here is how a Pew Law Center bankruptcy attorney in Arizona explains the SARE debtor’s situation.
The creditor of the SARE debtor can request relief from the automatic stay, which is the statutory injunction in bankruptcy. When this Chapter 11 creditor seeks relief from the automatic stay, and such relief is granted, then the creditor may foreclose on the real property. That is, unless the bankruptcy attorney in Arizona, Lawrence ‘D’ Pew, takes preemptive action on behalf of the individual debtor in one of the following ways:
• Timely files a reasonably confirmable Chapter 11 reorganization plan.
• Arranges for the debtor to start making interest payments within 90 days of filing the petition (in an amount equal to the non-default interest rate under the contract).
• Arranges for the debtor to start making interest payments within 30 days of the court’s conclusion that this is an SARE debtor (in an amount equal to the non-default interest rate under the contract).
So long as the payment of interest is equivalent to the underlying contract interest rate, the case will go forward without a problem for the SARE debtor.
Contact a Bankruptcy Attorney in Arizona for Advice and Advocacy
At the Pew Law Center, PLLC, we represent those individuals who seek bankruptcy relief under Chapter 7 (liquidation), Chapter 11 (reorganization), and Chapter 13 (individual debt adjustment) of the U.S. Bankruptcy Code. With Lawrence ‘D’ Pew as your bankruptcy attorney in Arizona, you will have the best legal advocate and the best opportunity to achieve your financial goals.
Call us at 480-745-1770 today. By making a single phone call, you will learn more about the Pew Law Center and how we can help you regain control of your financial future. When you contact us about our bankruptcy attorney in Arizona, we will schedule your FREE VIP Bankruptcy Consultation with lead attorney Lawrence ‘D’ Pew. So call us, you have nothing to lose and everything to gain by meeting with our bankruptcy attorney. In Arizona, we are always here to help those in financial trouble. There is no shame or blame at the Pew Law Center. Do you prefer to ask questions online? Then freely visit our website at www.PewLaw.com – we can chat with you there anytime, 24/7.