A lot of individuals in Texas have faced the quandary of whether to file for bankruptcy in recent years. As readers of this blog likely know, the typical forms of bankruptcy pursued by individuals are Chapter 7, which involves debt relief through the liquidation of all but exempt personal assets to pay off creditors, or Chapter 13, which involves obtaining court approval of a plan that repays a portion of unsecured debt over a set time frame and sees the balance erased at the end of that time horizon.
What many may not appreciate is how personal a business bankruptcy can get. If the business being taken through the process is a small, family-owned operation, the issues can be very personal, indeed. Whether the small business chooses to liquidate through Chapter 7 or reorganize under Chapter 11, the steps required can be emotionally draining.
That perspective seems to be very much on display in the matter of the Chapter 11 bankruptcy proceedings involving Texas Congressman Ruben Hinojosa. According to court documents, that case is now closed. It appears it was not an easy choice for Hinojosa to make.
Hinojosa undertook the process in December 2010 to address financial difficulties being faced by the meat products company that had been started by his dad and uncle. At the time of the filing, the member of the House Financial Services Committee claimed to be facing nearly $3 million in debt. Most of that was for a loan he had obtained through Wells Fargo Bank in hopes of helping his family’s business.
The congressman appeared apologetic when he said in a statement in 2010 that he had “done everything humanly possible to avoid filing for bankruptcy protection.” Despite his efforts, he said, he found himself stuck between a financial rock and a hard place.
There apparently were times in the course of the bankruptcy when questions were raised about some of the line items in the filing. But what seems to be forgotten is that debt relief through bankruptcy allows for certain exemptions and that the process doesn’t happen without court oversight.
Source: The Huffington Post, “Ruben Hinojosa, Texas Congressman, Emerges From Bankruptcy,” Chelsea Kiene, March 7, 2013
- The topics discussed in this blog reflect those that are handled by our firm. Learn more about our firm’s practice by visiting our Plano-Dallas bankruptcy page.