What Will Happen After Filing For Bankruptcy
Shortly after filing your bankruptcy petition, the court will mail a notice to you and your creditors that will include the following information:
- the bankruptcy filing number and date
- the automatic stay order notifying creditors to stop collections
- the meeting of creditors date, and
- other filing deadlines.
The automatic stay stops most creditors from trying to collect from you, so the collection calls, letters, wage garnishments, and even collection lawsuits should come to a quick halt. But it doesn’t stop all actions.
The meeting of creditors is the one event all filers must attend. You’ll turn over financial documents for the trustee’s review beforehand. At the meeting, the trustee will check your identification and asks questions about your filing. Creditors can appear and ask questions too, but they rarely do.
The last thing you’ll need to do is take the debtor education course and file the certificate. Once all the steps are complete, it’s a matter of waiting for your bankruptcy dischargethe order that wipes out your debts. Most bankruptcy cases close shortly thereafter. The average case takes three to four months to complete. Learn more about the Chapter 7 bankruptcy process.
How To Prevent Bankruptcy
Bankruptcy is generally a last resort, for businesses and individuals alike. Chapter 7 will, in effect, put a business out of business, while Chapter 11 may make lenders wary of dealing with the company after it emerges from bankruptcy. A Chapter 7 bankruptcy will remain on an individuals credit report for 10 years, a Chapter 13 for seven.
While bankruptcy may be unavoidable in many instances , one key to preventing it is borrowing judiciously. For a business, that could mean not using debt to expand too rapidly. For an individual, it might mean paying off their credit card balances every month and not buying a larger home or costlier car than they can safely afford.
Before filing for bankruptcy, and depending on their own internal legal resources, businesses may want to consult with an outside attorney who specializes in bankruptcy law and discuss any alternatives that are available to them.
Individuals are required by law to take an approved credit-counseling course before they file. Individuals also have other resources available to them, such as a reputable debt relief company, which can help them negotiate with their creditors. Investopedia publishes an annual list of the best debt relief companies.
What Are The Steps To Filing Chapter 7 Bankruptcy
We have discussed the do-it-your yourself steps. Nonetheless, the success of your Chapter 7 bankruptcy most likely will lie in finding an experienced bankruptcy attorney. Once you decide on an attorney, you can refer creditors to your lawyers office. Filing the petition will trigger an automatic stay, which means creditors cant pursue lawsuits, garnish your wages or contact you about your debts.
Dont take our word for it. I would counsel someone who is considering Chapter 7 bankruptcy to consult with an attorney to discuss the ramifications of filing for bankruptcy, Sinha says. Bankruptcy can have a long-term impact on a person’s credit score and ability to obtain credit in the future.
Here is a potential timetable:
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How To File For Bankruptcy
You’ll start the bankruptcy process by filing the bankruptcy “petition” with the bankruptcy court. Most Chapter 7 bankruptcy petitions are about 50-55 pages long, and it takes a bit of work to complete them. You’ll include information about your assets and debts, income and expenses, and previous financial transactions . All individual filers must take a counseling course and file the completion certificate.
Filing your paperwork isn’t free . If you can afford the filing fee, you’ll pay it when you submit your packet. Otherwise, you can apply for a fee waiver or ask the court for permission to pay in four installment payments. Learn more about preparing to file for bankruptcy.
Failing To Follow The Rules Can Have Serious Consequences
One of the primary reasons for speaking to an experienced Ohio bankruptcy attorney is that any small failure to correctly follow the procedures and court rules could result in the court refusing to discharge your debts. Further, you could incur serious penalties, including jail time and heavy fines for hiding funds or property or lying on your bankruptcy petitioneven if the omission was inadvertent.
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How Does The Chapter 7 Means Test Work
The means test limits the use of Chapter 7 bankruptcy to those who can’t pay their debts by testing whether you have enough income to repay creditors. If you don’t, you’ll pass. Here’s how it works.
You’ll start by determining if your “current monthly income” is more or less than your state’s median income for your family’s size. “Current monthly income” is your gross income earned over the six calendar months before filing for bankruptcy multiplied by two.
If you earn less than the median, you’ll pass and won’t need to do anything further. However, you won’t automatically fail the means test if you make more than the median because you’ll have a second chance to qualify.
The next step involves deducting allowed monthly expenses from your current monthly income to arrive at your monthly “disposable income.” The higher your disposable income, the more likely Chapter 7 bankruptcy won’t be an option. Instead, your bankruptcy option will be paying your disposable income to creditors through a Chapter 13 repayment plan, assuming you qualify.
Here’s where you’ll learn more about calculating your current monthly income for bankruptcy purposes.
What To Do After Chapter 7 Bankruptcy
What awaits the bankrupt individual on the sunny side of a discharge? Possibly hopefully a whole new way of thinking about money.
Bankruptcy is a fresh start for a debtor, says Catherine Peek McEwen, a Federal Bankruptcy Judge for the Tampa-based Middle District of Florida. Thats the pep talk I give my law students, and to everyone who comes into my courtroom.
That restart button must not be confused with a Men in Black Neuralyzer. Amnesia about the pain of a process is great for childbirth so weve been told but wretched for living a post-bankruptcy life.
A successful post-bankruptcy life will involve careful budgeting, prudent spending, diligent earning and investing, keeping your accounts current, and otherwise overseeing an orderly financial house.
If all this sounds daunting, or youre certain youll need to be coached up routinely, get with a nonprofit agency. There you will find free, no-obligation assistance from professional certified counselors. Helping consumers develop an affordable monthly budget is their specialty.
Youll benefit from their training and experience as you plot your financial future with a livable budget enhanced by savvy tips on how to make the bottom line come out in your favor every month.
You, however, being both happier and wiser, and in close association with your credit counselor, will keep the lessons of Chapter 7 close to your heart.
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Get Help Finding Your Fresh Start With A California Bankruptcy
At Rounds & Sutter, we pride ourselves on taking a personal and individualized approach toward helping our clients. We take the time to analyze your situation, listen to your needs, and work together toward finding the best path forward. We will walk you through all of your options, including both bankruptcy and non-bankruptcy options, such as loan modification or debt settlement. Start your journey to a brighter financial future today by calling Rounds & Sutter at our offices in Ventura, Santa Barbara, and Westlake Village for a free consultation.
Chapter 7 Prebankruptcy Credit Counseling
Before you file for Chapter 7 bankruptcy, you must complete a prebankruptcy credit counseling course conducted by an approved agency. You must complete this course within six months before the date you file for bankruptcy. Once the counseling is complete, you will receive a certificate that you must file with the court. You must also complete a debtor’s education course after you file your case.
Learn about the differences between the .
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Your Real Budget: Schedule I & J
The third qualification for Chapter 7 bankruptcy requires that your real-world post-bankruptcy budget must be neutral. This is done on Schedule I and J of the bankruptcy petition. While the Means Test is a backward-looking analysis of your past 6 months of income, your budget on Schedules I and J is a forward-looking analysis of what your budget will look like after your bankruptcy petition is filed and you are no longer obligated to pay most or all of your creditors.
Florida Chapter 7 Bankruptcy Means Test
The Florida bankruptcy means test is a complex formula to determine eligibility to file Chapter 7 bankruptcy. Debtors whose household income is under their states median income, and debtors whose debts are primarily business-related, are exempt from means test qualification. Bankruptcy debtors whose gross household income is above median income must pass the means test to file Chapter 7 bankruptcy.
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When To File Chapter 7 Bankruptcy
Filing for bankruptcy may well be the right choice. But the successful discharging of your debts will weigh heavily on your financial future for several years. Dont be hasty. Make certain you have scrutinized the five warning signs before you make your final choice.
It is a common misconception that individuals and couples should file Chapter 7 bankruptcy at the first sign of trouble, says Sumeet Sinha, founder and CEO of finpins.com, a personal finance blog and educational resource. You may consider Chapter 7 if creditors are harassing you, garnishing your wages and bank accounts and you have no way to pay off the debts. You may consider Chapter 7 as a last resort after your best efforts to pay your debts fail.
Five strong signs that indicate filing for Chapter 7 may be the correct remedy include:
Speak To A Knowledgeable Bankruptcy Attorney Today
If you are struggling to pay off your debts, you should consider filing for bankruptcy. At the Law Office of Simon Goldenberg, PLLC, our bankruptcy team has the experience and knowledge to help you navigate this complex process and will ensure you make the right choice for your situation. We understand how stressful overwhelming and insurmountable debt can be. Our team is committed to helping you achieve the stress-free life you deserve.
Get started on achieving debt relief today and contact our law office at 301-0584 to set up a free initial consultation.
258 Highlawn Ave, 1st FloorBrooklyn,NY 11230
159 Conklin Avenue, Suite 1RBinghamton,NY13903
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Some Of The Expenses That May Be Considered Include:
- Food and clothing
- Health care
- Health and/or disability insurance premiums and/or health savings account contributions
- Necessary care and support of an elderly, chronically ill, or disabled member of your household or member of your immediate family who is dependent on you.
- Public transportation costs
- Court-ordered payments
- Education expenses for dependent children younger than 18, up to $170.83 per child
- Tuition for job-related education or for services for a physically or mentally challenged dependent child if no similar public education is available
Each expense is calculated according to the number of people in your household, and health care costs are calculated separately according to whether individuals in the household are younger than 65 years old or 65 or older. There are additional caveats and conditions throughout the test.
If whats left when you deduct allowable expenses from your income your disposable income is more than the median monthly income in the state, you fail the means test and are presumptively ineligible to have your debt discharged by filing for Chapter 7 bankruptcy although you may still qualify for a discharge based on a showing of special circumstances.
To calculate the means test, you must submit the completed Chapter 7 Statement of Your Current Monthly Income and the Chapter 7 Means Test Calculation form , which may remind you of tax forms.
When To File For Bankruptcy
Bankruptcy law exists to help people who have taken on an unmanageable amount of debtoften as a result of large medical bills or other unexpected expenses that are no fault of their ownto make a fresh start. But it isnt a simple process and doesnt always lead to a happy ending.
So before filing for bankruptcy, be sure to explore all your alternatives and be prepared for some of the negative consequences described above. If you decide that bankruptcy is your only viable optionas hundreds of thousands of Americans do every yearremember that the blot on your record will not be permanent. By using credit carefully in the future and paying your bills on time, you can begin to rebuild your credit and gradually put bankruptcy behind you.
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Do I Meet The Qualifications For Chapter 7 Bankruptcy
If you do, chances are youll eventually walk away with a new lease on financial life.
The American Bankruptcy Institute reported that 94.3% of Chapter 7 filings between Oct. 1, 2018 and Sept. 30, 2019 were successfully discharged, meaning filers were no longer required to pay the debt.
Here are the standard requirements to qualify for Chapter 7 bankruptcy:
- You must pass a means test, which looks at your income, assets and expenses.
- You cannot have filed a Chapter 7 or Chapter 13 bankruptcy petition that was dismissed in the previous 180 days.
- You cannot have completed a Chapter 7 in the past eight years, or a Chapter 13 in the previous six years.
New York Bankruptcy Attorneys At Your Service
If you are thinking of filing for bankruptcy, Law Office of Simon Goldenberg can help you. Our experienced attorneys will thoroughly review your financial situation and advise you on meaningful solutions. To get in touch with Law Office of Simon Goldenberg, call 301-0584 or contact us online.
258 Highlawn Ave, 1st FloorBrooklyn,NY 11230
159 Conklin Avenue, Suite 1RBinghamton,NY13903
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Your Income Is Below Or Meets The Threshold
In North Carolina, you must earn less than the median income for the state in order to qualify. For a household of two, that means not exceeding $50,700. For a household of three, it is $55,000, and for a household of four, it is $63,700. If you exceed these income requirements, you are not automatically disqualified. You may then take the means test.
Chapter 7 Bankruptcy Means Test Calculator
The Chapter 7 Means Test Calculator below uses the bankruptcy means test data to estimate whether you qualify for a Chapter 7 bankruptcy using the US Bankruptcy Form .
Do you qualify for Chapter 7 bankruptcy? Estimate using the Chapter 7 means test below.
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The Chapter 7 341 Hearing Or Meeting Of Creditors
After you file a Chapter 7 bankruptcy case in Georgia, there is normally one hearing known as the 341 Meeting of Creditors, where the trustee and creditors can ask you questions. The trustees questions are typically aimed to see if you have any assets that can be sold to repay creditors. The trustee also conducts an examination to see if any fraudulent transfers of property were made prior to filing. Creditors have the right to appear at the hearing and ask you questions. However, it is rare that creditors appear at this meeting of creditors.
What If My Property Isnt Exempt
If you have property that you would like to protect from your creditors, the bankruptcy exemptions offer a way to do so. If your property is not exemptable for some reason, we generally caution against filing a Chapter 7 Bankruptcy, even if you otherwise qualify. Chapters 11 and 13 provide an opportunity for those filers with non-exempt property to pay their creditors over time while keeping their assets, rather than having those assets sold. Any transfer of property within the 3 years before the filing of the case may also affect whether Chapter 7 would be the best choice.
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Chapter 7 Bankruptcy Discharge
The successful conclusion of a Chapter 7 bankruptcy involves a discharge, what the Administrative Office of the U.S. Courts describes as a release individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.
Remember, however, the limits of the sorts of debts that can be discharged in a Chapter 7 bankruptcy. Filers who have retained an attorney to see them through the process will have an opportunity to review what, if any, obligations remain after a successful discharge.
As noted earlier, all but a tiny percentage of attorney-supported Chapter 7 filings are discharged. However, the court takes an aggressively dim view of Chapter 7 applicants who are found to be pulling a fast one.
Chapter 7 filings can be rejected for a variety of reasons, among them: debts for money/property acquired by false pretenses debts for fraud debts for malicious injury when contested by the injured creditor or debtor, without satisfactory explanation, makes a material misstatement or fails to provide documents/information related to an audit of the debtors case.