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Understanding Bankruptcy: How to File & Qualifications

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Understanding Bankruptcy: How to File & Qualifications

Bankruptcy | United States Courts

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

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Bankruptcy | United States Courts

Bankruptcy Definition – Investopedia

What is Bankruptcy

Bankruptcy is a legal term for when a person or business cannot repay their outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.

Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid, while offering creditors a chance to obtain some measure of repayment based on the individual’s or business’s assets available for liquidation. In theory, the ability to file for bankruptcy can benefit an overall economy by giving persons and businesses a second chance to gain access to consumer credit and by providing creditors with a measure of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

All bankruptcy cases in the United States are handled through federal courts. Any decisions over federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is eligible to file or whether he should be discharged of his debts. But sometimes, administration over bankruptcy cases is handled by a trustee, someone appointed by the United States Trustee, an officer of the Department of Justice, to represent the debtor’s estate in the proceeding. There is usually very little contact between the debtor and the judge, unless there is some objection made in the case by a creditor.

Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code: Chapter 7, which involves liquidation of assets; Chapter 11, which deals with company or individual reorganizations and Chapter 13, which is debt repayment with lowered debt covenants or payment plans. Bankruptcy filing specifications vary among states, leading to higher and lower filing fees depending on how easily a person or company can complete the process.

Individuals or businesses with few or no assets file Chapter 7 bankruptcy. The chapter allows individuals to dispose of their unsecured debts, such as credit cards and medical bills. Individuals with nonexempt assets, such as family heirlooms (collections with high valuations, such as coin or stamp collections),second homes and vehiclesand cash, stocks or bonds, must liquidate the property to repay some or all of their unsecured debts. So, you’re basically selling off your assets in order to clear away your debt.Consumers who have no valuable assets and only exempt property, such as household goods, clothing, tools for their trades and a personal vehicle up to a certain value, repay no part of their unsecured debt.

Businesses often file Chapter 11 bankruptcy, the goal of which is to reorganize and once again become profitable. Filing Chapter 11 bankruptcy allows a company to create plans for profitability, cut costs and find new ways to increase revenue. For example, a housekeeping business filing Chapter 11 bankruptcy might increase its rates slightly and offer more services to become profitable. Chapter 11 bankruptcy allows a business to continue conducting its daily operations without interruption, while working on a debt repayment plan under the court’s supervision. In rare cases, individuals file Chapter 11 bankruptcy.

Individuals who make too much money to qualify for Chapter 7 bankruptcy may file under Chapter 13. The chapter allows individuals and businesses to create workable debt repayment plans. In exchange for repaying their creditors, the courts allow these debtors to keep all of their property including nonexempt property.

The discharge of a Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical. Chapter 15 was added to deal with cross-border cases which involve debtors, assets, creditors and other parties who may be in more than one country. This type of petition is usually filed in the debtor’s home country.

When a debtor receives a discharge order, he is no longer legally required to pay any of the debts on that order. So, any creditor listed on that discharge cannot legally undertake any type of collection activity (making phone calls, sending letters)against the debtor once the discharge order is enforced. Therefore, the discharge absolves the debtor of any personal liability for the debts specified in the order.

But not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, debts to the government, etc. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that lien is still valid.

Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in the court before the deadline. This leads to the filing of an adversary proceeding in order to recover monies owe orenforce a lien.The discharge froma Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.

Declaring bankruptcy can help relieve you of your legal obligation to pay your debts and save your home, business or ability to function financially, depending on what kind of bankruptcy petition you file. But it also can lower your credit rating, making it more difficult to get a loan, mortgage, or low-rate credit card, or buy a home, apartment or business.

If you’re trying to figure out if you should file, your credit is probably already damaged. A Chapter 7 filing will stay on your credit report for ten years, while a Chapter 13 will remain there for seven. Any creditors you hit up for debt (a loan, credit card, line of credit or mortgage) will see the discharge on your report, which will prevent you from getting any credit.

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Bankruptcy Definition – Investopedia

Bankruptcy Basics | United States Courts

Bankruptcy Basics is a publication of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

Bankruptcy Basics (pdf) For cases filed before October 17, 2005

Bankruptcy Basics (pdf) For cases filed on or after October 17, 2005

Bankruptcy Basics is not a substitute for the advice of competent legal counsel or a financial expert, nor is it a step-by-step guide for filing for bankruptcy. The Administrative Office of the United States Courts cannot provide legal or financial advice. Such advice may be obtained from a competent attorney, accountant, or financial adviser.

November 2011Third Edition

While the information presented is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court. Finally, this publication should not substitute for the advice of competent legal counsel.

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Bankruptcy Basics | United States Courts

Understanding Bankruptcy: How to File & Qualifications

What is Bankruptcy?

Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who cant pay their bills and decide whether to discharge those debts so they are no longer legally required to pay them.

Bankruptcy laws were written to give people whose finances collapsed, a chance to start over. Whether it was bad decision-making or bad luck, lawmakers could see that in a capitalistic economy, consumers and businesses who failed, need a second chance.

And nearly all of them get it!

The American Bankruptcy Institute (ABI) did a study of PACER stats (public court records) from 2016 and found that 95.5% of the 499,909 Chapter 7 bankruptcy cases decided that year were discharged, meaning the individual was no longer legally required to pay the debt.

Only 22,388 cases were dismissed, meaning the judge or court trustee felt like the individual had enough resources to pay his/her debts.

Individuals who used Chapter 13 bankruptcy, best known as wage earners bankruptcy, were about split in their success. Slightly more than half (166,424) were discharged and 164,626 were dismissed.

The individuals and business who file for bankruptcy have far more debts than money to cover them and dont see that changing anytime soon. In 2015, bankruptcy filers owed $113 billion and had assets of $77 billion, most of that being real estate holdings, whose real value is debatable.

What is surprising is that people not businesses are the ones most often seeking help. They have taken on financial obligations like a mortgage, auto loan or student loan or perhaps all three! and dont have the income to pay for it. There were 844,495 bankruptcy cases filed in 2015, and 97% of them (819,760) were filed by individuals.

Only 24,375 bankruptcy cases were filed by businesses in 2015.

Most of the people filing bankruptcy were not particularly wealthy. The median income for the 819,760 individuals who filed, was just $34,392 and expenses were just $30,972.

It is important to understand that while bankruptcy is a chance to start over, it definitely affects your creditand future ability to use money. It mayprevent or delay foreclosureon a home and repossession of a car and it can also stop wage garnishment and other legal actions creditors use to collect debts, but in the end, there is a price to pay.

There is no perfect time, but there is a good rule of thumb to keep in mind when youre asking yourself the question: should I file for bankruptcy? If it is going to take more than five years for you to pay off all your debts, it might be time to declare bankruptcy.

The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them. If some combination of mortgage debt, credit card debt, medical bills and student loans has devastated you financially and you dont see that picture changing, bankruptcy might be the best answer. If you don’t qualify for bankruptcy, there is still hope.

Other possible debt-relief choices include a debt management program or debt settlement, but both of those typically need 3-5 years to reach a resolution and neither one guarantees all your debts will be settled when you finish.

Bankruptcy carries some significant long-term penalties because it will remain on your credit report for 7-10 years, but there is a great mental and emotional lift when youre given a fresh start and all your debts are eliminated.

The primary reason for declaring bankruptcy is to start all over again with a clean slate.

However, there is a secondary reason for filing that might ease some of the tension related to your problems. Declaring bankruptcy will stop the badgering phone calls, letters and other attempts to contact and collect from you.

Legally, its referred to as the automatic stay. It means that creditors are prohibited from filing a lawsuit against you or entering liens against your property or constantly contacting you in an effort to get a payment on the debt. It also stops things like eviction, utility disconnection and wage garnishments.

Bankruptcy is a long- tormenting situation. Once you have filed, the process usually takes six months or more to complete. Before, and during that time, you and possibly your friends or workplace, have received phone calls from debt collection agencies trying to settle your accounts. Those calls must stop as soon as you declare bankruptcy.

Like the economy, there is a rise and fall to bankruptcy filings in the U.S. In fact, the two are as connected as peanut butter and jelly.

Bankruptcy peaked with just over two million filings in 2005. That is the same year the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. That law was meant to stem the tide of consumers and businesses too eager to simply walk away from their debts.

The number of filings dropped 70% in 2006 to just 617,660, but then the economy tanked and bankruptcy filings increased rapidly to 1.6 million in 2010. They retreated again as the economy improved and have gone down 50% through 2016.

Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Filing bankruptcy with a court is the first step. You can file on your own or you can file with an attorney. Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees.

Bankruptcy is not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must wade through to be successful.

It starts with compiling all your financial records debts, assets, income, expenses and listing them. This not only gives you a better understanding of your situation, but also gives anyone helping you (and eventually the court) a better understanding.

The next step is to receive credit counseling within 180 days before filing your case. This is required step. You must obtain counseling from an approved provider listed on theUnited States Courtswebsite. Most counseling agencies offer this service online or over the phone.

The courts want you to do this to make sure you have exhausted all possibilities of finding a different way to handle your problem. Its important to understand that credit counseling is required. You will receive a certificate of completion from the course and this must be part of the paperwork when you declare bankruptcy, or your filing will be rejected.

Next, you file the petition for bankruptcy. If you havent done so at this point, this might be where you realize you need to find a bankruptcy lawyer. Legal counsel is not a requirement for individuals filing for either Chapter 7 or Chapter 13 bankruptcy, but you are taking a serious risk if you choose to represent yourself.

For one thing, you may not understand federal or state bankruptcy laws or be aware which laws apply to your case, especially regarding what debts can or cant be discharged. Judges are not permitted to offer advice and neither are the court employees involved in a case.

There also are many forms to complete and some important differences between Chapter 7 and Chapter 13 that you should be aware of when making decisions. Finally, if you dont know and follow the proper procedures and rules in court, it could affect the outcome of your case.

When your petition is accepted, your case is assigned to a court trustee, who sets up a meeting with your creditors. You must attend the meeting, but the creditors do not have to be there. This is an opportunity for them to ask you or the court trustee questions about your case.

If you cannot afford to hire an attorney, you may have options for free legal services. If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.

There are several types of bankruptcy for which individuals or married couples can file, the most common being Chapter 7 and Chapter 13.

Chapter 7 bankruptcyis a chance to receive a court judgment that releases you from responsibility for repaying debts. You are permitted to keep key assets, considered exempt property, but non-exempt property will be sold to repay part of your debt.

Property exemptions vary from state to state. You may choose to follow either state law or federal law, which may allow you to keep more possessions.

Examples of exempt property include your home, the car you use for work, equipment you use at work, Social Security checks, pensions, veterans benefits, welfare and retirement savings. These things cant be sold or used to repay debt.

Non-exempt property includes things like cash, bank accounts, stock investments, coin or stamp collections, a second car or second home, etc. Non-exempt items will be liquidated and the proceeds used to repay lenders.

Your assets will be sold by a court-appointed bankruptcy trustee. The proceeds go toward paying the trustee, covering administrative fees and, if funds allow, repaying your creditors as much as possible.

Chapter 7 is the most popular form of bankruptcy, making up 63 percent of individual bankruptcy cases in 2015.

Chapter 13 bankruptcies make up about 30 percent of non-business bankruptcy filings. AChapter 13 bankruptcyinvolves repaying some of your debts to have the rest forgiven. This is an option for people who do not want to give up their property or do not qualify for Chapter 7 because their income is too high.

People can only file for bankruptcy under Chapter 13 if their debts do not exceed a certain amount. The specific cutoff is reevaluated periodically, so check with a lawyer or credit counselor for the most up-to-date figures.

Under Chapter 13, you must design a three- to five-year repayment plan for your creditors. Once you successfully complete the plan, the remaining debts are erased.

However, most people do not successfully finish their plans. When this happens, debtors may then choose to pursue a Chapter 7 bankruptcy instead. If they don’t, creditors then can resume their attempts to collect the full balance owed.

The overriding principle of bankruptcy is that it gives you a fresh start with your finances. Chapter 7 (known as liquidation), wipes away debt by selling nearly all your possessions. Chapter 13 (known as the wage earners plan) gives you an opportunity to develop a 3-5 year plan to repay all your debt and keep what you have.

Both equal a fresh start.

Yes, filing for bankruptcy impacts your credit score. Bankruptcy remains on your credit report for 7-10 years, depending upon which chapter of bankruptcy you file under. For example, Chapter 7 (the most common) is on your credit report for 10 years, while a Chapter 13 filing (second most common) is there for seven years.

During this time, a bankruptcy discharge could prevent you from obtaining new lines of credit and may even cause problems when you apply for jobs.

If you are considering bankruptcy, yourcredit report and credit scoreprobably are damaged already. Your credit report may not endure significantly more damage, especially if you consistently pay your bills after declaring bankruptcy.

Still, because of the long-term effects of bankruptcy, some experts believe its most beneficial when you have more than $15,000 in debts.

Bankruptcy does not necessarily erase all financial responsibilities.

It also does not protect those who co-signed your debts. Your co-signer agreed to pay your loan if you didn’t or couldn’t pay. When you declare bankruptcy, your co-signer still may be legally obligated to pay all or part of your loan.

Most people consider bankruptcy only after they pursuedebt consolidation or debt settlement. These options can help you get your finances back on track and won’t negatively impact your credit as much as a bankruptcy.

Debt consolidationcombines all your loans to help you make regular and timely payments on your debts. Debt settlement is a means of negotiating with your creditors to lower your balance. If successful, it directly reduces your debts.

To learn more about bankruptcy and other debt-relief options, seek advice from a local credit counselor or read theFederal Trade Commission’sinformational pages.

Original post:

Understanding Bankruptcy: How to File & Qualifications

Bankruptcy | United States Courts

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

Continued here:

Bankruptcy | United States Courts

Understanding Bankruptcy: How to File & Qualifications

What is Bankruptcy?

Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who cant pay their bills and decide whether to discharge those debts so they are no longer legally required to pay them.

Bankruptcy laws were written to give people whose finances collapsed, a chance to start over. Whether it was bad decision-making or bad luck, lawmakers could see that in a capitalistic economy, consumers and businesses who failed, need a second chance.

And nearly all of them get it!

The American Bankruptcy Institute (ABI) did a study of PACER stats (public court records) from 2016 and found that 95.5% of the 499,909 Chapter 7 bankruptcy cases decided that year were discharged, meaning the individual was no longer legally required to pay the debt.

Only 22,388 cases were dismissed, meaning the judge or court trustee felt like the individual had enough resources to pay his/her debts.

Individuals who used Chapter 13 bankruptcy, best known as wage earners bankruptcy, were about split in their success. Slightly more than half (166,424) were discharged and 164,626 were dismissed.

The individuals and business who file for bankruptcy have far more debts than money to cover them and dont see that changing anytime soon. In 2015, bankruptcy filers owed $113 billion and had assets of $77 billion, most of that being real estate holdings, whose real value is debatable.

What is surprising is that people not businesses are the ones most often seeking help. They have taken on financial obligations like a mortgage, auto loan or student loan or perhaps all three! and dont have the income to pay for it. There were 844,495 bankruptcy cases filed in 2015, and 97% of them (819,760) were filed by individuals.

Only 24,375 bankruptcy cases were filed by businesses in 2015.

Most of the people filing bankruptcy were not particularly wealthy. The median income for the 819,760 individuals who filed, was just $34,392 and expenses were just $30,972.

It is important to understand that while bankruptcy is a chance to start over, it definitely affects your creditand future ability to use money. It mayprevent or delay foreclosureon a home and repossession of a car and it can also stop wage garnishment and other legal actions creditors use to collect debts, but in the end, there is a price to pay.

There is no perfect time, but there is a good rule of thumb to keep in mind when youre asking yourself the question: should I file for bankruptcy? If it is going to take more than five years for you to pay off all your debts, it might be time to declare bankruptcy.

The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them. If some combination of mortgage debt, credit card debt, medical bills and student loans has devastated you financially and you dont see that picture changing, bankruptcy might be the best answer. If you don’t qualify for bankruptcy, there is still hope.

Other possible debt-relief choices include a debt management program or debt settlement, but both of those typically need 3-5 years to reach a resolution and neither one guarantees all your debts will be settled when you finish.

Bankruptcy carries some significant long-term penalties because it will remain on your credit report for 7-10 years, but there is a great mental and emotional lift when youre given a fresh start and all your debts are eliminated.

The primary reason for declaring bankruptcy is to start all over again with a clean slate.

However, there is a secondary reason for filing that might ease some of the tension related to your problems. Declaring bankruptcy will stop the badgering phone calls, letters and other attempts to contact and collect from you.

Legally, its referred to as the automatic stay. It means that creditors are prohibited from filing a lawsuit against you or entering liens against your property or constantly contacting you in an effort to get a payment on the debt. It also stops things like eviction, utility disconnection and wage garnishments.

Bankruptcy is a long- tormenting situation. Once you have filed, the process usually takes six months or more to complete. Before, and during that time, you and possibly your friends or workplace, have received phone calls from debt collection agencies trying to settle your accounts. Those calls must stop as soon as you declare bankruptcy.

Like the economy, there is a rise and fall to bankruptcy filings in the U.S. In fact, the two are as connected as peanut butter and jelly.

Bankruptcy peaked with just over two million filings in 2005. That is the same year the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. That law was meant to stem the tide of consumers and businesses too eager to simply walk away from their debts.

The number of filings dropped 70% in 2006 to just 617,660, but then the economy tanked and bankruptcy filings increased rapidly to 1.6 million in 2010. They retreated again as the economy improved and have gone down 50% through 2016.

Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Filing bankruptcy with a court is the first step. You can file on your own or you can file with an attorney. Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees.

Bankruptcy is not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must wade through to be successful.

It starts with compiling all your financial records debts, assets, income, expenses and listing them. This not only gives you a better understanding of your situation, but also gives anyone helping you (and eventually the court) a better understanding.

The next step is to receive credit counseling within 180 days before filing your case. This is required step. You must obtain counseling from an approved provider listed on theUnited States Courtswebsite. Most counseling agencies offer this service online or over the phone.

The courts want you to do this to make sure you have exhausted all possibilities of finding a different way to handle your problem. Its important to understand that credit counseling is required. You will receive a certificate of completion from the course and this must be part of the paperwork when you declare bankruptcy, or your filing will be rejected.

Next, you file the petition for bankruptcy. If you havent done so at this point, this might be where you realize you need to find a bankruptcy lawyer. Legal counsel is not a requirement for individuals filing for either Chapter 7 or Chapter 13 bankruptcy, but you are taking a serious risk if you choose to represent yourself.

For one thing, you may not understand federal or state bankruptcy laws or be aware which laws apply to your case, especially regarding what debts can or cant be discharged. Judges are not permitted to offer advice and neither are the court employees involved in a case.

There also are many forms to complete and some important differences between Chapter 7 and Chapter 13 that you should be aware of when making decisions. Finally, if you dont know and follow the proper procedures and rules in court, it could affect the outcome of your case.

When your petition is accepted, your case is assigned to a court trustee, who sets up a meeting with your creditors. You must attend the meeting, but the creditors do not have to be there. This is an opportunity for them to ask you or the court trustee questions about your case.

If you cannot afford to hire an attorney, you may have options for free legal services. If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.

There are several types of bankruptcy for which individuals or married couples can file, the most common being Chapter 7 and Chapter 13.

Chapter 7 bankruptcyis a chance to receive a court judgment that releases you from responsibility for repaying debts. You are permitted to keep key assets, considered exempt property, but non-exempt property will be sold to repay part of your debt.

Property exemptions vary from state to state. You may choose to follow either state law or federal law, which may allow you to keep more possessions.

Examples of exempt property include your home, the car you use for work, equipment you use at work, Social Security checks, pensions, veterans benefits, welfare and retirement savings. These things cant be sold or used to repay debt.

Non-exempt property includes things like cash, bank accounts, stock investments, coin or stamp collections, a second car or second home, etc. Non-exempt items will be liquidated and the proceeds used to repay lenders.

Your assets will be sold by a court-appointed bankruptcy trustee. The proceeds go toward paying the trustee, covering administrative fees and, if funds allow, repaying your creditors as much as possible.

Chapter 7 is the most popular form of bankruptcy, making up 63 percent of individual bankruptcy cases in 2015.

Chapter 13 bankruptcies make up about 30 percent of non-business bankruptcy filings. AChapter 13 bankruptcyinvolves repaying some of your debts to have the rest forgiven. This is an option for people who do not want to give up their property or do not qualify for Chapter 7 because their income is too high.

People can only file for bankruptcy under Chapter 13 if their debts do not exceed a certain amount. The specific cutoff is reevaluated periodically, so check with a lawyer or credit counselor for the most up-to-date figures.

Under Chapter 13, you must design a three- to five-year repayment plan for your creditors. Once you successfully complete the plan, the remaining debts are erased.

However, most people do not successfully finish their plans. When this happens, debtors may then choose to pursue a Chapter 7 bankruptcy instead. If they don’t, creditors then can resume their attempts to collect the full balance owed.

The overriding principle of bankruptcy is that it gives you a fresh start with your finances. Chapter 7 (known as liquidation), wipes away debt by selling nearly all your possessions. Chapter 13 (known as the wage earners plan) gives you an opportunity to develop a 3-5 year plan to repay all your debt and keep what you have.

Both equal a fresh start.

Yes, filing for bankruptcy impacts your credit score. Bankruptcy remains on your credit report for 7-10 years, depending upon which chapter of bankruptcy you file under. For example, Chapter 7 (the most common) is on your credit report for 10 years, while a Chapter 13 filing (second most common) is there for seven years.

During this time, a bankruptcy discharge could prevent you from obtaining new lines of credit and may even cause problems when you apply for jobs.

If you are considering bankruptcy, yourcredit report and credit scoreprobably are damaged already. Your credit report may not endure significantly more damage, especially if you consistently pay your bills after declaring bankruptcy.

Still, because of the long-term effects of bankruptcy, some experts believe its most beneficial when you have more than $15,000 in debts.

Bankruptcy does not necessarily erase all financial responsibilities.

It also does not protect those who co-signed your debts. Your co-signer agreed to pay your loan if you didn’t or couldn’t pay. When you declare bankruptcy, your co-signer still may be legally obligated to pay all or part of your loan.

Most people consider bankruptcy only after they pursuedebt consolidation or debt settlement. These options can help you get your finances back on track and won’t negatively impact your credit as much as a bankruptcy.

Debt consolidationcombines all your loans to help you make regular and timely payments on your debts. Debt settlement is a means of negotiating with your creditors to lower your balance. If successful, it directly reduces your debts.

To learn more about bankruptcy and other debt-relief options, seek advice from a local credit counselor or read theFederal Trade Commission’sinformational pages.

Originally posted here:

Understanding Bankruptcy: How to File & Qualifications

Bankruptcy – Nolo’s Free Legal Encyclopedia | Nolo

Learn about bankruptcy (Chapter 7, Chapter 13, and other types of bankruptcy), as well as other alternatives for managing your debt. Find out how bankruptcy works, how debts are discharged (cancelled), how bankruptcy laws protect your assets and stop creditors, and whether it might be a good option for you.

Go here to see the original:

Bankruptcy – Nolo’s Free Legal Encyclopedia | Nolo

Bankruptcy Information | Chapter 7, Chapter 13, Chapter 11 …

Are you struggling with these debt problems?

We are a diverse group of bankruptcy lawyers and consumer advocates. What bring us together is our common devotion to you, the consumer.

We recognize that living well in America has become increasingly more difficult for the average consumer a group which is commonly known as the middle class. Tragically, the roadblocks to financial freedom and stability have proliferated to include rising interest rates, predatory loans. Adjustable Rate Mortgages, inaccurate credit reports, obnoxious and unethical debt collectors and easy credit.

We are here to help guide you through the roadblocks and where necessary, perform minor surgery on your pocketbook. If you are a consumer with questions please feel free to contact any one of us.

Our memberAttorneys

Our contributing attorneys

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Bankruptcy Information | Chapter 7, Chapter 13, Chapter 11 …

BankruptcyInformation.com – Personal Bankruptcy Information

The federal bankruptcy law is designed to provide people going through a tough financial time with an opportunity for a fresh start.

To help you determine if you need a fresh start, you can use our Credit Card Debt Calculator to determine how long it will take to pay off your credit cards if you do nothing.

There are many reasons why people file for bankruptcy relief. Often, it is because of a loss of income due to losing a job or even just a decrease in income that prevents the person from paying all of their bills.

Another life event that may cause someone to file for bankruptcy relief is a medical emergency or prolonged illness that results in massive medical costs that are not covered by insurance. Even the death of a spouse can create a financial crisis where the only alternative is to file for bankruptcy protection. It could even be that someone has made very poor financial decisions in the past and have over-extended himself or herself to the point where it is now impossible to meet all of their financial obligations given their current income.

The bottom line is that people file for bankruptcy relief because some type of life event or circumstance has caused them to be unable to continue paying for their basic living expenses in addition to paying their bills.

The ultimate goal in filing for relief under either Chapter 7 or Chapter 13 bankruptcy is a discharge of your debts.

If you qualify to file for a Chapter 7 bankruptcy case, you will receive a complete discharge of most of, in not all, of your unsecured debts when the case is completed. This means that once the bankruptcy case is closed, you will no longer be legally responsible for the payment of the debts that are discharged through the bankruptcy case.

The automatic stay provisions of Section 362 of the U.S. Bankruptcy Code prevent creditors from attempting to collect any debt that is discharged through a Chapter 7 bankruptcy action. This includes collection actions, wage garnishments, judgments and seizure of property.

If you file a Chapter 13 you will create a 3 to 5 year repayment plan. At the end of the successful competition of your plan your debts will be discharged.

The advantage of a Chapter 13 plan is that it may allow to keep your home or other property on which you are behind in payments or which are not covered by your exemptions. You will also enjoy the protections of the automatic stay when you file a Chapter 13 bankruptcy.

The property a debtor can keep through the bankruptcy is determined by the specific exemptions available under state law. Bankruptcy Information allows you to search for state exemptions. In addition, residents of certain states are allowed to choose federal exemptions instead of state exemptions.

Before deciding upon the appropriate course of action you may wish to explore somealternatives to bankruptcy and review thefrequently asked questionssection of the site in order to gain a better understanding of the bankruptcy process.

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BankruptcyInformation.com – Personal Bankruptcy Information

Florida Bankruptcy Laws from FloridaBankruptcy.com

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Florida Bankruptcy Laws from FloridaBankruptcy.com

Get Your Pre Bankruptcy Certificate – Your Bankruptcy …

1> (Credit Counseling Course)

, (Credit Counseling Course)

2> (Debtor Education Course)

, (Debtor Education Course)

2

800-625-7725 3342 2

Work with one of the most established companies in the financial counseling sector. We have been helping people with financial education for over 50 years. We have taken the guesswork out of filing for bankruptcy in two simple steps.

Step 1> Take Pre-Filing Education Course. Before filing for bankruptcy, the United States Federal Bankruptcy Court requires that you take a Pre-Filing Education course from an approved credit counseling agency.

Step 2> Take Debtor Education Course. Once you’ve completed the Pre-Filing Education Course and filed your case, you must take the Debtor Education Course you are required to have to obtain your discharge of debts.

We provide both education courses in Thai for you to complete to receive your certificate to file with the courts. Please call our Thai counselor, Pimolrat, at 800.625.7725 Ext. 3342 for instructions on how to sign up and complete the courses

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Get Your Pre Bankruptcy Certificate – Your Bankruptcy …

Bankruptcy | United States Courts

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

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Bankruptcy | United States Courts

Declaring Bankruptcy | Internal Revenue Service

If you owe past due federal taxes that you cannot pay, bankruptcy may be an option. Other options include an IRS payment plan or an offer in compromise.

If you are a person that has filed bankruptcy, a debtors attorney or a U.S. Trustee with questions about an open bankruptcy you may contact the IRS Centralized Insolvency Operations Unit, Monday through Friday, 7:00 a.m. to 10:00 p.m., EST, at 1-800-973-0424.

For individuals, the most common type of bankruptcy is a Chapter 13. Before you consider filing a Chapter 13 here are some things you should know:

Partnerships and corporations file bankruptcy under Chapter 7 or Chapter 11 of the bankruptcy code. Individuals may also file under Chapter 7 or Chapter 11. For additional tax information on bankruptcy, refer to Publication 908, Bankruptcy Tax Guide and Publication 5082, What You Should Know about Chapter 13 Bankruptcy and Delinquent Returns (PDF).

Other types of bankruptcy include Chapters 9, 12 and 15. Cases under these chapters of the bankruptcy code involve municipalities, family farmers and fisherman, and international cases. For information see Other Types of Bankruptcy Chapters 9, 12 & 15.

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Declaring Bankruptcy | Internal Revenue Service

Bankruptcy – Investopedia

What is Bankruptcy

Bankruptcy is a legal term for when a person or business cannot repay their outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.

Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid, while offering creditors a chance to obtain some measure of repayment based on the individual’s or business’s assets available for liquidation. In theory, the ability to file for bankruptcy can benefit an overall economy by giving persons and businesses a second chance to gain access to consumer credit and by providing creditors with a measure of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

All bankruptcy cases in the United States are handled through federal courts. Any decisions over federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is eligible to file or whether he should be discharged of his debts. But sometimes, administration over bankruptcy cases is handled by a trustee, someone appointed by the United States Trustee, an officer of the Department of Justice, to represent the debtor’s estate in the proceeding. There is usually very little contact between the debtor and the judge, unless there is some objection made in the case by a creditor.

Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code: Chapter 7, which involves liquidation of assets; Chapter 11, which deals with company or individual reorganizations; and Chapter 13, which is debt repayment with lowered debt covenants or payment plans. Bankruptcy filing specifications vary among states, leading to higher and lower filing fees depending on how easily a person or company can complete the process.

Individuals or businesses with few or no assets file Chapter 7 bankruptcy. The chapter allows individuals to dispose of their unsecured debts, such as credit cards and medical bills. Individuals with nonexempt assets, such as family heirlooms (collections with high valuations, such as coin or stamp collections),second homes and vehicles,and cash, stocks or bonds, must liquidate the property to repay some or all of their unsecured debts. So, you’re basically selling off your assets in order to clear away your debt.Consumers who have no valuable assets and only exempt property, such as household goods, clothing, tools for their trades and a personal vehicle up to a certain value, repay no part of their unsecured debt.

Businesses often file Chapter 11 bankruptcy, the goal of which is to reorganize and once again become profitable. Filing Chapter 11 bankruptcy allows a company to create plans for profitability, cut costs and find new ways to increase revenue. For example, a housekeeping business filing Chapter 11 bankruptcy might increase its rates slightly and offer more services to become profitable. Chapter 11 bankruptcy allows a business to continue conducting its daily operations without interruption, while working on a debt repayment plan under the court’s supervision. In rare cases, individuals file Chapter 11 bankruptcy.

Individuals who make too much money to qualify for Chapter 7 bankruptcy may file under Chapter 13. The chapter allows individuals and businesses to create workable debt repayment plans. In exchange for repaying their creditors, the courts allow these debtors to keep all of their property including nonexempt property.

The discharge of a Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical. The Chapter 15 was added to deal with cross-border cases which involve debtors, assets, creditors and other parties who may be in more than one country. This type of petition is usually filed in the debtor’s home country.

When a debtor receives a discharge order, he is no longer legally required to pay any of the debts on that order. So, any creditor listed on that discharge cannot legally undertake any type of collection activity (making phone calls, sending letters)against the debtor once the discharge order is enforced. Therefore, the discharge absolves the debtor of any personal liability for the debts specified in the order.

But not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, debts to the government, etc. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that lien is still valid.

Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in the court before the deadline. This leads to the filing of an adversary proceeding in order to recover monies owe orenforce a lien.The discharge froma Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.

While it may relieve you of your legal obligation to repay your debts, filing for bankruptcy does have consequences. Depending on the kind of petition, a bankruptcy will hurt your credit rating. If you’re trying to figure out if you should file, your credit is probably already damaged. A Chapter 7 filing will stay on your credit report for 10 years, while a Chapter 13 will remain there for seven. Any creditors you hit up for debt (a loan, credit card, line of credit or mortgage) will see the discharge on your report, which will prevent you from getting any credit.

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Bankruptcy – Investopedia

Bankruptcy Basics | United States Courts

Bankruptcy Basics is a publication of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

Bankruptcy Basics (pdf) For cases filed before October 17, 2005

Bankruptcy Basics (pdf) For cases filed on or after October 17, 2005

Bankruptcy Basics is not a substitute for the advice of competent legal counsel or a financial expert, nor is it a step-by-step guide for filing for bankruptcy. The Administrative Office of the United States Courts cannot provide legal or financial advice. Such advice may be obtained from a competent attorney, accountant, or financial adviser.

November 2011Third Edition

While the information presented is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court. Finally, this publication should not substitute for the advice of competent legal counsel.

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Bankruptcy Basics | United States Courts

PACER – Public Access to Court Electronic Records

Public Access to Court Electronic Records (PACER) is an electronic public access service that allows users to obtain case and docket information online from federal appellate, district, and bankruptcy courts, and the PACER Case Locator. PACER is provided by the Federal Judiciary in keeping with its commitment to providing public access to court information via a centralized service.

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PACER – Public Access to Court Electronic Records


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