From Our Perspective: Chapter 7 Bankruptcy Saved Our Client’s Home and Future

Elizabeth German
By: Elizabeth German
PublishedJan 3, 2024
3 minute read

Robinson & Henry’s knowledgeable attorneys give their professional insight in our ongoing series “From Our Perspective” where we take a closer look at successful outcomes achieved by our attorneys. 

In this episode, Robinson & Henry Bankruptcy Partner Elizabeth German explains how Chapter 7 bankruptcy gave our client, a struggling business owner, a clean slate.

For many small business owners, the dream of running their own venture can quickly turn into a financial nightmare. That was the case for one of our clients who found themselves in more than $200,000 in debt after their business succumbed to the pressures of COVID and other challenges. The client’s biggest hurdle was a personally guaranteed Small Business Administration (SBA) loan.

Thanks to the power of Chapter 7 bankruptcy and the expert guidance of Liz, this client shed their immense debt burden and protected their home and car, paving the way for a fresh start.

Past results afford no guarantee of future results; each matter is different and must be judged on its own merits. Facts are those of an actual Robinson & Henry litigation case. 


Question: Liz, thank you for joining me today. Tell me more about our client and why they needed your help.

Liz: I had an individual who had a business that they wanted to shut down. It was failing, COVID, and a lot of other reasons why they just could not keep running. Their biggest problem was an SBA loan that they had personally guaranteed. And normally, you wouldn’t have an issue if you just shut the business down because you liquidate assets and they go along their way and there’s nothing to collect.

However, when you carry that personal guarantee, they’re going to look to satisfy that debt with personal assets. So we had to contemplate a personal bankruptcy for this individual and see what we could do. And it turned out they had a home, they had some cars, and we did a case assessment and determined that a Chapter 7 would benefit them. They would be able to keep their home, keep their car, and get rid of that loan along with credit card debt and not some insubstantial tax debt as well. 

Question: You touched on that a little bit, but why was Chapter 7 the best option for this client in this case? 

Liz: They were able to protect their house and their car through exemptions. And Chapter 7 allows people to basically walk away from the debt without repaying it over a period of time. And you have to be under a certain income, so they were able to qualify. Colorado did just increase the exemption amount to protect equity in your home and your cars. They were able to avail themselves of that protection versus having to repay debt over a period of time in a Chapter 13. That was specific to their circumstance, but that’s why we always say to talk to us, to see what your options are, and they were very lucky to be able to fall within that protection. 

Question: How do you help clients understand the potential impact on their assets in a Chapter 7 case? 

Liz: We offer a case assessment for everyone having debt issues. In that process, we provide a questionnaire that asks for background information like their income, because that’s going to play a part in what chapter they can file, their assets and their value, and we go through what the risks and benefits of each chapter would be.

Most people would like to file Chapter 7, that may not always be an option. We do have the ability to provide them with an assessment for alternatives, even non bankruptcy options as well. If it turns out they may not be benefited from that, we help with all types of debt resolution. Obviously, mainly focusing on bankruptcy for most people, but we don’t try to put them in a box. We give them all their options and answer their questions in that case assessment. 

Question: What was the outcome of this case and how were you able to help the client protect their assets in this situation? 

Liz: In this case, this individual, they got their discharge. They were able to shut down their business. We worked with the trustee on liquidation of some assets and some of the debt got paid back as it related to the business.

But he walked away, discharging probably over about $250,000 of debt, the largest of which was that SBA loan and protected the home and the cars and could start over and rebuild credit and their life. 

Question: What steps do you recommend clients take in preparing for Chapter 7 bankruptcy? 

Liz: So not doing Google research is the first starting point. Contacting an attorney to get your options so that you understand there’s a lot of misinformation out there, especially as it relates to income requirements assets. Am I going to lose my house? Everybody’s case is different. No one has the same assets, no one has the same income or debt. Contact an attorney first and foremost, then we’ll be able to walk you through the process.

You’re going to run into things like wanting to collect all your bills so we know who needs to be noticed to get discharged in your bankruptcy. Certain financial information, taxes. But we’re really relying on the attorney to walk you through and give that, and we do that. Once you hire us, we have a very in-depth conversation with you. We give you a flowchart, we give you a list of documents, and we walk you through every step of that process. 

Question: Why should someone reach out to an experienced attorney and not try to handle a situation like this on their own? 

Liz: Because of the fact that the laws are always changing with those asset protections, exemptions, limits on your income. If you fill out forms and you file them, you could find yourself without representation. And there have been serious cases of pro se, people filing bankruptcy and having their homes and cars taken through liquidation because they didn’t know the appropriate protections or which chapter to file. 


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