If you like seafood and eat at chain restaurants, there’s a good chance that you’ve been to a Red Lobster at least once in your life. You might even take your man to Red Lobster on special occasions, but only if you have hot sauce in your bag. Eating cheddar bay biscuits and choosing your dinner from a fish tank are commonly-shared experiences across the United States. But the restaurant industry has faced a number of challenges since the pandemic that make it more difficult for businesses, including household names, to stay open. When businesses struggle with their finances, they oftentimes turn to bankruptcy. Businesses can declare chapter 7 bankruptcy, which compels a business to close, or chapter 11 bankruptcy, which allows a business to close or stay running. Red Lobster is the latest company to contemplate bankruptcy as a means to address debt and guard assets from creditors. 

Restaurants that focus on a dine-in experience were the hardest hit by the pandemic- most people don’t think of running to Red Lobster when they want a quick takeout dinner for their family. Although pandemic quarantine measures were eventually lifted, these restaurants continue to feel the effects to this day. Inflation has increased the price of ingredients, which translates to higher prices on the menu, which results in fewer people going out to dinner at seafood restaurants. Paying for labor has been another issue for Red Lobster. As the cost of living skyrockets out of control, restaurant employees need higher pay just to survive. Many states are increasing the minimum wage, which undoubtedly impacts staffing costs at restaurants like Red Lobster. 

Red Lobster has tried to navigate post-pandemic difficulties with a variety of methods and leaders. One former president, Edna Morris, was released from her position after introducing all-you-can-eat crab meals for $22.99, which ended up costing Red Lobster millions of dollars. The current owner of Red Lobster, Thai Union Group, attempted a similar marketing strategy by offering all-you-can-eat shrimp meals for $20. While also unsuccessful, this meal is still being served but at $25 per customer. Red Lobster’s CEO, Horace Dawson, is retiring, leading the restaurant to replace him with Jonathan Tibus, who is the managing director of a management consultant firm. Tibus is known for assisting other restaurants like Kona Grill and Krystal with chapter 11 bankruptcy filings. 

Bringing on an expert in chapter 11 bankruptcy has done nothing to stop the rumors of Red Lobster’s imminent filing. Thai Union Group announced its intentions to sell the Red Lobster brand due to negative financial contributions to its portfolio. It expects the sale to be a loss and has taken a $527 million writedown. So what does this mean for the future of Red Lobster? The chain, which was started in 1968, currently has more than 800 locations nationwide. It has 14 locations just in Arizona, with restaurants in Chandler, East Mesa, Flagstaff, Gilbert, Goodyear, Mesa, Oro Valley, Peoria, Phoenix, Prescott, Scottsdale, Surprise, Tucson, and Yuma. This translates to hundreds of jobs that could be at risk if the bankruptcy filing leads to a shutdown. 

How Red Lobster’s Potential Bankruptcy Would Differ From The Average Filing

A typical consumer’s bankruptcy case will look much different from a large corporation’s like Red Lobster. Most people will have nowhere near as much debt as a restaurant chain with 800 locations that has been struggling for four years since a pandemic. Most people also don’t have as many assets. While an individual could file for chapter 11 bankruptcy as is expected of Red Lobster, a typical person’s needs are usually best suited by chapter 7 or chapter 13. 

The standout feature of chapter 11 bankruptcy is that creditors are highly involved, forming a committee that will vote on issues relevant to the case. Small businesses can use special types of chapter 11 filings to bypass this requirement, but the debtor must be a business and fall under certain debt limits. Using a small business or subchapter V filing can speed up the chapter 11 bankruptcy process as well as bring down the cost. But even with a simplified filing, chapter 7 and chapter 13 can be much simpler. For most of these cases, the only interaction the debtor will have with their creditors is at their 341 hearing. This hearing, also known as the 341 Meeting of Creditors, also serves to verify the debtor’s identity and information provided in the petition. Debtors in chapter 7 and chapter 13 cases will need to complete one credit counseling course before filing and a second course within 60 days of the 341 hearing. The rest of the debtor’s responsibilities will depend on which chapter they file. 

There are several reasons that chapter 7 is the most popular form of consumer bankruptcy. It is relatively inexpensive to file and fast to discharge- a typical case will last 3 to 6 months. All of the debtor’s unsecured nonpriority debts will be discharged by a successful chapter 7. Chapter 7 is simpler and less expensive to file than other types of bankruptcy. A debtor can also retain any assets that are protected by bankruptcy exemptions, such as their 401(k) or any equity in their home within the homestead exemption. However, unprotected assets could be at risk of being sold at bankruptcy auction, and the debtor must also show that they qualify based on income. If you want to see if you qualify for chapter 7 bankruptcy in the state of Arizona, call for your free consultation at 602-509-0955.  

Chapter 13 bankruptcy is sometimes a backup option for those who don’t qualify for chapter 7, and sometimes the first choice because of its unique benefits. Chapter 13 is a payment plan that lasts 3 or 5 years, based on the debtor’s income level. This can help a debtor save a home from foreclosure or pay off a car to save it from repossession. It also offers options that aren’t available in chapter 7, such as discharging secondary mortgages on a home with a loan balance higher than its market value. To determine what your Arizona chapter 13 payment plan would look like, call 602-509-0955 for your free consultation with our firm. 

Let Our Experienced Professionals Guide You Through Your Bankruptcy Options

Chapter 11 may be on the table for Red Lobster, but it isn’t the best option for everybody. But chapter 7 and chapter 13 bankruptcy each have their own restrictions and qualifications. Determining if you are eligible under Arizona law can be complicated without the proper legal experience. Our lawyers offer free consultations so you can figure out if bankruptcy would be an effective option for you, and which chapter you should file. If you are seeking high-quality bankruptcy representation in Phoenix or Tucson, we will provide you with a competitive quote for our services. Most of our clients qualify for our post-filing payment plan options starting as low as Phoenix Bankruptcy Lawyers. Don’t leave any aspect of your filing up to chance. Our skilled bankruptcy team will help make the process faster and easier. To get started today with your free consultation, contact us or call 602-509-0955. 

Phoenix Bankruptcy Lawyers

668 N. 44th St. Set 320
Phoenix, Arizona 85008
Phone: (602) 509-0955

There are so many factors and potential issues that can affect the best course of action in a bankruptcy case. A bankruptcy petition must be filed correctly so that the debtor can enjoy all of the benefits that bankruptcy has to offer. There are also certain actions that a debtor should engage in and avoid before filing a bankruptcy petition with the court. If you are preparing a bankruptcy filing, you should even be aware of which expenses you are paying. You can save money by stopping payment on some of your expenses, but it can create problems if you stop paying other bills. Read on to learn more tips about which bills to continue paying while you prepare to file for bankruptcy. If you have more questions or are seeking quality representation from a Phoenix bankruptcy attorney, call 602-509-0955 for your free consultation with our firm.

Mortgage

Filing for bankruptcy doesn’t erase secured debts. If you are still paying off the mortgage on your home, your mortgage is a secured debt and the house is a secured asset. Keep making your payments or your creditor will proceed with a foreclosure once your case is complete. Your creditors can also request permission from the court to proceed with a collection effort, such as a home foreclosure, while the case is still active through a Motion for Relief from the Automatic Stay.

Second Mortgage

Depending on your circumstances, continuing to pay a second mortgage may only be a drain on your resources. If you owe more on your home than it’s worth and have a second mortgage, Chapter 13 bankruptcy provides an opportunity to discharge that secondary home mortgage. If you are unsure about your home’s value compared to your mortgage balances or which chapter of bankruptcy you will file, you can discuss your situation for free with one of our Arizona bankruptcy lawyers by calling 602-509-0955.

Rent

Most renters prefer that their landlords never find out about their bankruptcy filings. This is possible because there is an option on bankruptcy petitions to exclude landlords from the debtor’s mailing list of creditors. But if a bankruptcy debtor wants to use their filing to cancel their rental lease, clearly the landlord will need to be notified. This option can be used when the debtor can no longer afford their rent and has a more affordable option available- the typical fees associated with breaking a lease will be wiped away with bankruptcy. Otherwise, failure to pay your rent during your bankruptcy can give your landlord cause to evict you once the bankruptcy- and the protections provided to you by the automatic stay- are complete. Back rent from a prior eviction is a debt that can be cleared by a bankruptcy filing.

Utilities

Unpaid utility bills can be discharged by a bankruptcy filing, but your utility providers don’t have to keep providing you with services if you discharge their bills in bankruptcy. For some bills, finding a new provider can be simple enough- for example, if you discharge your Verizon cell phone bill in your bankruptcy filing, you can switch to T. Mobile, AT&T, or another one of their competitors. But you won’t always have a choice in provider for every type of utility. If you move to a new home, you may only have one choice for utilities like electricity and home internet. Here, you may have to repay the balance owed to your utility provider to renew services despite your legal obligation to pay the debt already being cleared.

Insurance Coverage

Filing for bankruptcy won’t affect your health insurance, auto insurance, etc. Keep paying these monthly expenses so that your coverage doesn’t lapse- this will end up costing you more than staying current with your bills.

Credit Cards

What happens with your credit cards in bankruptcy will depend on the chapter that you file. They are wiped out by Chapter 7, but a Chapter 13 bankruptcy debtor may end up paying off some or all of their credit card debts in their payment plan. So if you plan to file for Chapter 13 bankruptcy and have a while to wait before filing but need an available balance on your credit card, you might want to make a payment. Otherwise, it usually isn’t strategic to continue paying off a credit card when you know that you will be discharging it in bankruptcy shortly. That isn’t to say that you should max out all of your credit cards- there are limits on spending before filing meant to prevent this type of abuse of the bankruptcy system. Don’t spend over $800 on luxury items in the 90 days before your bankruptcy filing. You should also avoid cash advances on your credit cards over $1,100 in the 70 days before your bankruptcy filing. If your credit card companies suspect you of fraud, you could be subject to one or more adversary proceedings during your bankruptcy case. For more assistance with your questions and concerns about your credit cards before filing for bankruptcy, call 602-509-0955 for your free phone consultation with our firm.

Personal Loans

Personal loans are unsecured debts that can be erased by bankruptcy. Some personal loans are through financial institutions, but they can also be from friends and family. Discharging your financial obligation to repay someone you know probably won’t discharge your moral obligation to pay back someone that you know. But it isn’t recommended to pay back your friends and family while preparing for a bankruptcy filing. This is considered a preferential payment because you would be paying back “insiders” in favor of your other creditors. If the trustee finds evidence of preferential payments in your bankruptcy petition, it can have disastrous consequences. The trustee can utilize a “clawback,” where the trustee would demand the return of any funds paid to insider creditors. This can create delays and extra costs in your case.

Child Support

Child support is not discharged by bankruptcy and is one of the only debts that is immune to the Automatic Stay. Only a Chapter 13 bankruptcy that fully pays back child support can stop a child support wage garnishment. Failure to pay child support doesn’t just create debt- it can have negative repercussions such as a driver’s license suspension or even criminal penalties. The expenses that should be paid in favor of child support are few and far between.

Have a Monthly Expense Not Described Here? Contact Our Firm for a Free Consultation.

Paying some bills when you anticipate a bankruptcy filing soon might be a waste. Your bankruptcy lawyer can help you strategize where to direct your funds while preparing for bankruptcy so that your case can proceed smoothly. Proper planning can help you get the most out of your bankruptcy. At Phoenix Bankruptcy Lawyers, we have represented countless clients in situations like yours to clear debts and move forward with a clean slate. When you’re ready to get started with your free consultation with one of our experienced Phoenix and Tucson bankruptcy lawyers, you can call 602-509-0955.

 

Phoenix Bankruptcy Lawyers

668 N. 44th St. Set 320
Phoenix, Arizona 85008
Phone: (602) 509-0955

Blog by Phoenix Bankruptcy Lawyer, Alison C. Briggs

Chapter 7 bankruptcy is a legal process that provides individuals and businesses with a fresh financial start by eliminating most of their unsecured debts. While it offers significant relief to those struggling with overwhelming debt, it’s essential to understand that not everyone benefits equally from a Chapter 7 bankruptcy filing. In this blog, we will define Chapter 7 bankruptcy, discuss the individuals and entities impacted by such a filing, and suggest why it’s wise to hire a Phoenix Bankruptcy Lawyer, specifically from My AZ Lawyers, one of the leading debt relief firms in Phoenix.

Defining Chapter 7 Bankruptcy in Phoenix

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” is a legal process that allows individuals and businesses to discharge or eliminate their unsecured debts, such as credit card debt, medical bills, and personal loans. In a Chapter 7 bankruptcy, a bankruptcy trustee is appointed to sell non-exempt assets, if any, and distribute the proceeds to creditors, with the remaining eligible debts discharged.

It’s important to note that not all debts can be discharged in a Chapter 7 bankruptcy. Certain obligations, like child support, alimony, student loans, and some tax debts, are generally not eligible for discharge.

People Impacted by a Phoenix Chapter 7 Bankruptcy Filing

• Debtor: The debtor, or the person or entity filing for Chapter 7 bankruptcy, is the most directly impacted party. They stand to benefit from the elimination of unsecured debts but may lose non-exempt assets in the process. Exempt assets, which vary by state, are protected from liquidation in a Chapter 7 bankruptcy.
• Creditors: Creditors are individuals or entities to whom the debtor owes money. In a Chapter 7 bankruptcy, creditors may lose money as their unsecured debts are discharged, and they may receive only a fraction of what they are owed from the liquidation of non-exempt assets. Secured creditors, who have collateral securing their loans, may not lose as much as unsecured creditors.
• Bankruptcy Trustee: The bankruptcy trustee is appointed by the court to oversee the bankruptcy process, including the sale of non-exempt assets and the distribution of proceeds to creditors. The trustee’s role is to maximize the amount of money that can be distributed to creditors.
• Co-signers and Guarantors: If someone has co-signed a loan or acted as a guarantor for the debtor, they may be held responsible for the debt if the debtor’s obligation is discharged in Chapter 7 bankruptcy. This can lead to financial losses for co-signers and guarantors.
• Spouse and Family Members: If the debtor is married and files for Chapter 7 bankruptcy individually, it may still impact the non-filing spouse to some extent, as joint debts and shared property could be affected. However, the non-filing spouse’s separate assets and credit are generally protected.
• Employees and Business Partners: In cases where a business entity files for Chapter 7 bankruptcy, employees may lose their jobs, and business partners may face financial losses if the business assets are liquidated to pay off creditors.

Why Hire a Phoenix Bankruptcy Lawyer from My AZ Lawyers

Filing for Chapter 7 bankruptcy is a significant legal and financial decision that can have far-reaching consequences. Here’s why it’s advisable to hire a Phoenix Bankruptcy Lawyer from My AZ Lawyers:

• Expertise: Attorneys at My AZ Lawyers specialize in bankruptcy law and have extensive knowledge and experience in guiding individuals and businesses through the Chapter 7 bankruptcy process. Their expertise ensures that you receive the best legal advice and representation.
• Customized Solutions: Each bankruptcy case is unique, and a skilled attorney can assess your specific financial situation to determine the most suitable approach for debt relief. They will help you understand your options and create a tailored strategy to protect your assets and discharge eligible debts.
• Asset Protection: Bankruptcy lawyers understand the exemptions available under Arizona law to protect your assets from liquidation. They can help you make informed decisions about which assets you can retain during bankruptcy.
• Legal Advocacy: When you hire a bankruptcy attorney, you have an advocate who will represent your interests throughout the bankruptcy process. They will communicate with creditors, the bankruptcy trustee, and the court on your behalf, relieving you of the stress of handling complex legal matters.
• Avoid Mistakes: Filing for Chapter 7 bankruptcy without legal guidance can lead to costly mistakes and potential loss of assets. Bankruptcy attorneys ensure that you adhere to all legal requirements, helping you achieve the best possible outcome.

Chapter 7 Bankruptcy in Phoenix

Chapter 7 bankruptcy can provide much-needed financial relief for individuals and businesses drowning in unsecured debts. However, it’s crucial to recognize that not everyone benefits equally from a Chapter 7 bankruptcy filing, as creditors, co-signers, and others may incur losses.

To navigate the complexities of Chapter 7 bankruptcy in Phoenix effectively and protect your interests, it’s highly recommended to hire a Phoenix Bankruptcy Lawyer from My AZ Lawyers, a reputable debt relief firm in Phoenix. Their legal expertise and personalized guidance can make a significant difference in achieving a successful bankruptcy outcome while minimizing potential financial losses. Remember that seeking professional legal counsel is a crucial step toward securing your financial future.

 

Phoenix Bankruptcy Lawyers

668 N. 44th St. Set 320
Phoenix, Arizona 85008
Phone: (602) 509-0955

Boston Market has long been an affordable chain restaurant that families can rely on for a convenient meal, especially if they like rotisserie chicken. However, the chain’s owner, Jay Pandya, filed a personal bankruptcy in the state of Pennsylvania on December 8, 2023. Pandya’s filing comes in the wake of numerous lawsuits from a variety of creditors. Vendors and franchisors are pursuing him for unpaid bills, and employees are pursuing him for unpaid wages. This can quickly become a business owner’s worst nightmare, especially with a company that has seen falling profits in recent years. Personal bankruptcy can shield Pandya from his creditors, who will need a motion for relief from the automatic stay if they wish to continue with a lawsuit while his bankruptcy is in good standing. Unfortunately, Boston Market’s story shows that people have less disposable income available for dining and this could result in many people losing their jobs. Personal bankruptcy can shield you from creditors and clear debts that you can’t afford to pay. To learn more about bankruptcy in Arizona, call 602-509-0955.

How Boston Market Ended Up Here

This filing is only part of a long period of financial struggles for Boston Market. Pandya came to own Boston Market when his company, Engage Brands (under the Rohan Group of Companies) purchased it in 2020. Pandya also owns Yum Brands, which owns fast food companies like KFC, Pizza Hut, and Taco Bell. Yum Brands also used to own Long John Silver’s and A&W Restaurants. Pandya as an individual is a huge player in the fast food industry. But Engage Brands originally acquired Boston Market while it was in the midst of financial struggles and Yum Brands declared bankruptcy during the pandemic.

Boston Market’s legal and financial woes may have irreparably damaged its reputation as a business. In May 2023, Boston Market’s Denver headquarters were seized by local authorities. This seizure also included three restaurant locations in Aurora, Colorado. A distraint warrant, which allows the Department of Revenue to seize business assets and change the locks on the doors, was issued due to Boston Market’s back taxes and unpaid wages. The amount owed was reportedly about $300,000. They were able to settle the balance and reopen their Colorado doors. Just a few months later, Boston Market faced a similar issue in New Jersey. In August 2023, 27 Boston Market locations in New Jersey were shut down due to the chain’s failure to pay $630,000 in wages to 314 employees. The total unpaid wages, fines, and other fees came out to approximately $2.5 million. Over the past few years, Boston Market has closed several hundred locations and not opened any new ones. While Pandya’s bankruptcy is a personal one, his control over the company affects many people. It will be up to the court to decide, through his bankruptcy, if keeping Boston Market in business will be in the creditors’ best interests.

Examples of Successful Restaurant Bankruptcy Cases

Most businesses either file for Chapter 11 bankruptcy or Chapter 7 bankruptcy. Chapter 11 bankruptcy can be used to reformulate a business, emerge, and continue operating, or shut down. Chapter 7 bankruptcy only offers business debtors the choice to shut down. Many restaurants have used bankruptcy to deal with debts and creditors, with many of them being forced to do so due to the pandemic. Examples of restaurants that have previously declared bankruptcy include:

• Chuck E. Cheese 
• California Pizza Kitchen
• Sizzler
• Souplantation/Sweet Tomatoes
• Ruby Tuesday
• Bar Louie
• Rubio’s
• Cici’s Pizza

Personal Bankruptcy & Protection from Creditors

For the average person, filing for bankruptcy will be much simpler than the case of someone who owns Boston Market and other restaurant chains. But whether you file for Chapter 7 bankruptcy, Chapter 13 bankruptcy, or even Chapter 11 bankruptcy, it will activate the automatic stay. The automatic stay protects bankruptcy debtors from their creditors in a plethora of ways. 

Filing for bankruptcy can stop a creditor from filing a lawsuit and put one that has already been filed on hold. If the creditor has already obtained a money judgment against the debtor, it might qualify to be cleared by a bankruptcy filing. A creditor could use that money judgment to pursue a wage garnishment or bank account levy against the debtor, which will also be stopped by the automatic stay. The automatic stay also stops repossession and foreclosures. If you are concerned about an action a creditor may take against you and want to learn if bankruptcy will help, call 602-509-0955 for your free phone consultation.

How to Choose Which Chapter to File

There are different chapters of bankruptcy to suit different debt relief needs. Most of the time, individuals will be best off using Chapter 7 or Chapter 13. Chapter 11 can be an expensive and complicated ordeal and generally requires significant involvement from creditors in the form of a creditor committee. Small businesses can bypass the creditor committee through a small business or subchapter V filing. 

A major factor in the choice between Chapter 7 and Chapter 13 is income eligibility. Chapter 7 is the most commonly filed form of consumer bankruptcy but has strict income limits. A debtor whose household income exceeds the state median for their family size will need to qualify for Chapter 7 bankruptcy through the means test. Because Chapter 13 pays off debts in a payment plan, debtors can have a higher income and still qualify where they might not qualify for Chapter 7. It also allows debtors to keep assets that might not be protected by bankruptcy exemptions in Chapter 7. 

When you’re behind on the payments for a secured asset (like your house or car) that you wish to keep, chapter 7 bankruptcy might not be as useful to you as Chapter 13. Chapter 7 bankruptcy will only stop a repossession or foreclosure for a few months if the debtor can’t become current on their past-due balance. Chapter 13 can make it more affordable by essentially spreading that amount out over several years. A creditor will usually have no cause to proceed with a foreclosure or repossession after the successful completion of a Chapter 13 bankruptcy. 

Countless factors can impact which type of bankruptcy will be more effective in your situation. Our skilled Arizona bankruptcy lawyers can walk you through them, free of charge, with your initial phone consultation. To schedule yours today, call 602-509-0955. 

Arizona Bankruptcy Lawyers with High-Quality and Caring Service

A bankruptcy filing from someone like the owner of Boston Market shows that unmanageable debt can happen to anyone. Skillful bankruptcy representation can clarify the process and reduce the risk of obstacles and delays. An accurate bankruptcy filed in compliance with Arizona and federal bankruptcy law will result in a less stressful overall experience. Our bankruptcy attorneys have years of experience representing clients all across the valley and in Tucson. We offer flexible payment plans and you may even qualify to file for zero dollars down. To learn more about the services we offer at Phoenix Bankruptcy Lawyers, call 602-509-0955 to schedule your free consultation. 

 

Phoenix Bankruptcy Lawyers

668 N. 44th St. Set 320
Phoenix, Arizona 85008
Phone: (602) 509-0955