Debt can be a particularly frustrating thing to have to go through because of all of its uncertainties down the road. From a depleted credit score to the concerns surrounding future loan applications, a person must often weigh these cons against the pros of debt relief prior to filing for any form of bankruptcy protection. It’s worth noting though that filing for bankruptcy is no guarantee that a person will not have to file again in the future, which is a fact that some of our readers here in Kentucky may know quite well.
For those of our readers who may not have experience with multiple bankruptcies in their lives, they can see if playing out right now with the discount retailer Loehmann’s who, for the third time in the company’s history, has had to file for bankruptcy protection in the hopes of getting relief from debt. Recently this month, the retailer announced that it had filed for Chapter 11 bankruptcy protection in federal court with the hopes of selling its remaining assets at auction to pay off the company’s current debt.
Oftentimes with Chapter 11 bankruptcy, the goal is to purge as much debt as possible and restructure in an attempt to turn a profit down the road. While this was Loehmann’s plan with its past bankruptcy filings, its third filing demonstrates that its previous attempts were not as successful as it had hoped. This might leave some of our readers wondering if the courts will allow the company to follow through with the process a third time or will instead suggest that the company file for another form of bankruptcy such as Chapter 7.
Although Chapter 11 bankruptcy is usually associated with businesses, it’s worth noting that this form of bankruptcy protection can sometimes be sought by consumers in rare instances. For example, a celebrity, who has accrued a number of debts because of bad investments, may file for Chapter 11 if they can show that they still have earning potential. Although this form of bankruptcy is considered more time-consuming and costly than other forms of bankruptcy, it is considered more debtor-friendly and may be a suggested option by a skilled attorney.
Source: USA Today, “Loehmann’s files for bankruptcy for 3rd time,” The Associated Press, Dec. 16, 2013