A legal process that is governed by the Bankruptcy Code, bankruptcy allows a person (a “Debtor”), who is unable to fully pay outstanding debts, pay a 7.portion of the money over a set time (in the case of Chapter 11, 12 or 13 bankruptcies) or rid themselves of the debt entirely under Chapter 7.
Bankruptcy is also available to businesses, corporations, and partnerships.
Creditors must stop all collection efforts after a debtor has filed their case (or ‘petition’) and this protection is referred to as the ‘automatic stay’. Once this ‘stay’ is in place the creditors and collection agencies may not contact you or file or maintain lawsuits and they are prohibited from filing liens and/or garnishing your wages.
This stay will likely not apply to tax debt, child support or alimony payments.
And the bankruptcy court can, in some cases, allow the collection efforts to continue if the creditors petition the court to lift the stay
Filing for bankruptcy triggers an ‘automatic stay’ and stops collection efforts, including procedures for foreclosure and repossession of property. The bankruptcy may not fully stop these procedures, but merely delay them depending on what type of bankruptcy is filed and how you negotiate with the lender during the procedure.
A Chapter 7 allows you to stall a foreclosure sale and stop a lender from repossessing your car. The lender may petition the court to lift the stay and it is on you and your attorney to work with the lender to negotiate repayment or change the terms of the mortgage. If you cannot afford to catch up on payments, the court will most likely lift the stay and allow the lender to foreclose or repossess the property.
A Chapter 13 allows you to stop a foreclosure sale and propose a debt repayment plan to enable you to catch up on your payments and cover future mortgage payments. As long as your plan is approved and you continue to make payments in full and in a timely manner, you may be able to avoid foreclosure entirely.
To keep your vehicle in a Chapter 13 requires a similar approach. You can stop repossession altogether if your plan addresses your payments in arrear as well as your future car loan payments in your debt repayment plan and you continue to make full payments in a timely manner.
While you have the right as an individual to file for bankruptcy without an attorney, the use of an attorney is recommended.
Bankruptcy code and the court procedures can be complex, making it very beneficial for you to hire a lawyer to help you navigate these rules and procedures.
Hiring a bankruptcy lawyer with experience and a full understanding of the relevant bankruptcy laws and local court procedures can mean the difference between a full debt discharge and a dismissal for failure to comply with the law and requirements. Ignorance of the law can cost you far more than the fees of a qualified attorney.
Gather all of the necessary information and bring it to the meeting with your bankruptcy lawyer. Be completely truthful with your attorney. This will help expedite the process and enable us to give you the best advice.
Contact a qualified local bankruptcy attorney and schedule a consultation to determine the best course of action for your situation.
Receive credit counseling from an approved non-profit credit counseling agency. A list of approved agencies can be found on the US Trustee’s website http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm.
The main difference between Chapter 7 and Chapter 13 bankruptcy is the eligibility requirements on the individual. In order to file Chapter 7 you must take a Chapter 7 means test and qualify.
In Chapter 7 bankruptcy, while it is possible that you will turn over non-exempt property in order that it can be sold and the proceeds distributed to your creditors, you do not have to commit to repay your debt.
In Chapter 13 bankruptcy, a debt repayment plan must be filed in order to repay a portion of or all of your debt. This plan takes place over a 3-5 year time frame and you must demonstrate that you have sufficient income to support your household and make full payments in a timely manner.
Most consumer debt can be discharged through a successful bankruptcy procedure. There are categories of debt, however, that are considered ‘non-dischargeable’. This debt includes tax debt, alimony and child support, government fines or penalties, criminal restitution and more.
Some debts that are considered ‘non-dischargeable’ can in fact be discharged under certain circumstances and your lawyer can help you understand what debt you have that can be discharged and what is considered ‘non-dischargeable’.
Student loan debt is considered a ‘non-dischargeable’ debt. However if you are able to show the court that repaying the debt is an undue hardship for you, you may be able to have all or a portion of the debt discharged.
Different courts use different hardship tests to determine undue hardship and if you cannot pass the undue hardship test, you will still owe on your student loans after a Chapter 7 bankruptcy and regular payment amounts will resume after you have completed a Chapter 13 plan. It is possible that you may be able to negotiate a reduced payment during the course of the debt repayment plan.
As one of the major causes of bankruptcy for individuals or married couples, medical debt is usually a form of unsecured debt that is able to be discharged through bankruptcy.
Depending on whether you file for Chapter 7 or Chapter 13, this will determine the extent to which any of your unsecured debt, such as your medical bills, are repaid or discharged.
Expect to pay the court filing fee at the time of filing.
Chapter 7 filing fees are $338.
Chapter 13 filing fees are $313.
Attorney and filing fees must be paid prior to filing the bankruptcy. We offer payment plans for Chapter 7’s.
If you cannot pay it at this time, you can ask the court to split the payment up or waive it completely.
The filing remains on your credit report for a maximum of ten (10) years under provisions of the Fair Credit Reporting Act.
The Fair Credit Reporting Act, 6 U.S.C. § 605, is the law that controls credit-reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person’s credit report after ten years from the date the bankruptcy case is filed.
If it has been past the 10 years, you may want to contact the Federal Trade Commission, Bureau of Consumer Protection, Education Division, Washington, D.C. 20580; their phone number is (202) 326-2222. That agency can provide further information on reestablishing credit and addressing credit problems.
You can also directly contact the credit bureau(s) reporting the information (Equifax, Experian, and TransUnion are the three major credit bureaus).
If you find yourself unable to make your Chapter 13 payment on time, contact your attorney immediately.
Contact them by phone and by letter stating the problem and informing them of whether this is a temporary situation or permanent.
If temporary, inform the attorney of the time and manner in which you will be able to make the payments required under your approved Chapter 13 plan. If the Trustee agrees to the plan, you will make the payments according to this agreement. If you are permanently unable to make the payments, the Trustee can request that the case be dismissed or moved to another Chapter. This determination requires legal counsel and if you find yourself in this situation, reach out to your qualified bankruptcy attorney before too much time has lapsed so they can help you make the appropriate decisions.