Meet With Your Trustee To Review Your Options
Now that youve selected your trustee you should contact them and schedule a free initial consultation. You will be asked to bring some specific details of your financial situation, including your income and expenses, assets and debts.
At your first meeting, your trustee will review your financial details, and outline the alternatives to bankruptcy that could be chosen in your case, ranging from debt consolidation through consumer proposals and including the bankruptcy process. Your trustee will provide you with information and advice on each which is best for you but the decision will remain in your hands and you will have as much time as you need.
- If you have enough income, debt consolidation or credit counseling are good debt relief options.
- Consumer proposals allow you to keep your house and other assets, subject to the rights of secured creditors.
Surplus Income Rule Can Increase Payments
The general concept of a surplus income payment is the more money you earn the more money you pay into your bankruptcy for the benefit of your creditors.
The government has set net monthly income thresholds, for a person or a family, to maintain a reasonable standard of living in Canada. Every dollar that a bankrupt makes above this income threshold, is subject to a surplus income payment of 50%. For example, if your income is $400 above the limit, you would be required to make a surplus income payment of $200.
Each month you will be required to send your bankruptcy trustee a copy of your paystub, so they can calculate your net income and determine if any surplus income payments are required, and if so how much they will be.
- A first bankruptcy will last for a minimum period of nine months.
- If on average you are paying more than $100 per month in surplus income payments, then your bankruptcy will be extended for an additional 12 months.
However, in the event that you are also paying child support, or have significant medical expenses, then your income will be reduced by these amounts, reducing your surplus income total.
To calculate what your potential surplus income might be, try out our surplus income bankruptcy calculator.
Do You Get Out Of All Your Debts If You File For Bankruptcy
Bankruptcy can renegotiate or erase many types of unsecured debts, such as on credit cards or personal loans. Other debts cannot be discharged in a bankruptcy, including:
The U.S. Bankruptcy Code lists 19 different categories of debts that cannot be discharged in:
- Alimony and child support
- Certain unpaid taxes, such as tax liens. However, some federal, state, and local taxes may be eligible for discharge if they date back several years
- Debts for willful and malicious injury to another person or property
- Debts for death or personal injury caused by the debtorâs operation of a motor vehicle while intoxicated from alcohol or impaired by other substances
- Debts that you failed to list in your bankruptcy filing
- Common/maintenance fees for condo association
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Filing Bankruptcy For Free In Cleveland
If you choose the go-it-alone approach to filing for bankruptcy, your best bet is to contact the Cleveland bankruptcy court to explore your options. The Cleveland bankruptcy court also provides a step-by-step process of how to file without an attorney online. Information is provides in both video and text format, including the federal poverty guidelines, filing guidelines and even form instructions to help you complete your bankruptcy paperwork.
You may also be able to file bankruptcy for free in Ohio by filing through free legal aid clinics like the Ohio ACLU or services like Upsolve. You can also reach out to the Legal Aid Society of Cleveland to see if you qualify for free bankruptcy filing services.
Bankruptcy Fees Waivers And Payment Plans
If youre unable to pay your filing fees, the court will usually try to work with you. For Chapter 13 bankruptcy, you may be able to roll your court fees into your repayment plan, paying the court in monthly installments. If you file Chapter 7 bankruptcy and youre unable to pay off the fee in installments over 120 days, you might be able to request a fee waiver. The bankruptcy court bases fee waivers on income limits, so your combined family income will need to be less than 150 percent of the poverty limit. If you dont qualify for a fee waiver, you may want to consider applying to pay in installments.
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Acceptance Of The Plan Of Reorganization
As noted earlier, only the debtor may file a plan of reorganization during the first 120-day period after the petition is filed . The court may grant extension of this exclusive period up to 18 months after the petition date. In addition, the debtor has 180 days after the petition date or entry of the order for relief to obtain acceptances of its plan. 11 U.S.C. § 1121. The court may extend or reduce this acceptance exclusive period for cause. 11 U.S.C. § 1121. In practice, debtors typically seek extensions of both the plan filing and plan acceptance deadlines at the same time so that any order sought from the court allows the debtor two months to seek acceptances after filing a plan before any competing plan can be filed.
If the exclusive period expires before the debtor has filed and obtained acceptance of a plan, other parties in interest in a case, such as the creditors’ committee or a creditor, may file a plan. Such a plan may compete with a plan filed by another party in interest or by the debtor. If a trustee is appointed, the trustee must file a plan, a report explaining why the trustee will not file a plan, or a recommendation for conversion or dismissal of the case. 11 U.S.C. § 1106. A proponent of a plan is subject to the same requirements as the debtor with respect to disclosure and solicitation.
Kentucky Bankruptcy Court Costs For Chapter 7
Filing for bankruptcy in a Kentucky bankruptcy court is generally affordable, depending on the chapter youre filing for. You will owe $338 to the Kentucky bankruptcy court if you pay in full. This bankruptcy court cost breaks down to $245 for the filing fee, $78 for the administrative fee, and $15 for the bankruptcy trustee fee. But if payment plans are better for you, you can pay $84.50 in four installments. The bankruptcy court filing fees for the other chapters of bankruptcy are as follows:
- BankruptcyChapter 11: $1,738 in full, or four installments of $434.50 .
- Chapter 12: $278 in full, or four installments of $69.50.
- Chapter 13: $313 in full, or four installments of $78.25.
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Debts Not Released By Bankruptcy
Section 178 of the Bankruptcy and Insolvency Act sets out certain debts that are not released by an order of discharge.
The most common are any fine, penalty, restitution order, child support payments and alimony payments that are set out in a court order or agreement, and any debt arising out of fraud. It is important to note that student loans are not dischargeable for a period of 10 years from when the bankrupt ceased to be a full or part-time student.
Balance Transfer Credit Card
If you have credit card debt on a card with a high APR, try transferring the balance to a card that offers 0% interest APR. This lets you pay down the balance without being charged any interest.
Most of these special APR offers last between 12 and 20 months, depending on the cards terms. When the special offer is over, a regular interest rate will kick in, so its best to make as many payments as you can during the introductory period.
Using a balance transfer credit card to address debt can both help and hurt your overall credit score. It can help your score by reducing your overall credit utilization rate, which is the amount of your available credit in use. This is important because your credit utilization rate accounts for 30 percent of your credit score.
If you add more available credit without increasing the total amount of debt you owe, that lowers your credit utilization rate, which increases your credit score, says Sullivan. So, if you do a balance transfer and keep the old cards open but do not use them, your credit score will start to improve.
However, opening a new credit card can also negatively impact your score. When you apply for a credit card, there will be a hard inquiry on your credit report, which can reduce your score. Hard inquiries may stay on your report for as long as two years, though their impact on your credit score will likely decrease before then.
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Suspended Income Tax Payments
HMRC will apply a nil tax code when youre bankrupt. This tells your employer not to take any further income tax from your wages for the rest of the tax year . The extra money in your pay that results from this can be claimed by the trustee to form part or all of an IPA or IPO. If the IPA or IPO is wholly paid out of this extra income, it will stop when you start paying tax again.
The NT will not tell your employer youre bankrupt as an NT can be applied for a number of reasons.
How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities a schedule of current income and expenditures a statement of financial affairs and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling evidence of payment from employers, if any, received 60 days before filing a statement of monthly net income and any anticipated increase in income or expenses after filing and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
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How Much Does It Cost To Go Bankrupt
Its important to talk to a free debt adviser before you pay the fee to make sure that bankruptcy is the best solution for you.
It costs £680 to apply for bankruptcy and youll need to pay this before you submit your application.
If you cant afford the fee you might be able to pay in instalments.
To find out more about this, contact the insolvency enquiry line.
How To Pay Chapter 13 Attorney Fees
Chapter 13 bankruptcy is all about the payment plan. You are filing under Chapter 13 because:
You make too much money to qualify to file Chapter 7
You have auto loan or mortgage arrears you need to catch up on
You have alimony or child support arrears you need to catch up on
You have an income tax, government fines or fees, or student loan arrears you need to catch up on.
Adding up your arrears and crafting a Chapter 13 repayment plan over three or five years with applicable interest, and accounting for the Trustees administrative fees, is a complicated matter best left to an attorney to calculate and have confirmed .
Most Chapter 13 attorneys allow part or all of their fees to be paid through the Chapter 13 plan – meaning, your attorney gets paid in full over time, just like your other creditors. This makes obtaining the Chapter 13 legal representation you need affordable for just about anyone.
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Your Creditors May Hold A Meeting
Sometimes, a meeting of creditors is required or requested. The purpose of this meeting is to
- allow creditors to obtain information about the bankruptcy
- confirm the appointment of the LIT
- appoint up to five inspectors to supervise the administration of your estate and
- allow creditors to give direction to the LIT.
If a meeting is called, you will be required to attend.
Filing Bankruptcy Without A Lawyer Should You Do It
Simply put, No. Filing for bankruptcy without a lawyer is a bad idea. Weve said it a lot of different ways already, but it cannot be overstated enough.
You should try to make it happen any way you can. Lawyers may be willing to work in payment installments, and something as big as bankruptcy should not be taken lightly. Not paying for a lawyer is a short-sighted solution that can put you in a worse situation than you started in.
In fact, you should not even hire an inexperienced attorney. Bankruptcy involves complex federal laws and rules. Attorneys need a thorough understanding of the Bankruptcy Code, Bankruptcy Rules and local rules. One mistake could cost you big. It could even cost your property.
Very few bankruptcies are successful without the presence of an experienced lawyer, and thats because bankruptcy lawyers are experts in helping you:
A Closer Look At Chapter 7
Chapter 7 bankruptcy does not involve a repayment plan. Further, it is only applicable to individuals and not corporations or partnerships.
This type of bankruptcy Chapter begins with the debtor filing for a petition with the bankruptcy court to discharge the debts and to stop collecting agencies from hounding the debtor with lawsuits, wage garnishments, and other actions.
Though less complicated than Chapter 13, it is still a serious legal process that needs to be executed seamlessly to be successful. Filing without a lawyer is never advisable.
A Closer Look At Chapter 13
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What Documents Do You Need To File For Bankruptcy
Theres a heck of a lot of paperwork and forms and documents involved in bankruptcy, but lets talk about what you need to gather up at the start:
- Tax returns for the past two years or four years
- Income documents
- Other documentation showing any other debts or expenses, like alimony or child support
Yes, thats a lot. Bankruptcy is not an easy out! Also, your particular state or court system may require more. Get ready to do a lot of hunting and have a lot of patience here.
High Income Or Surplus Income
When declaring bankruptcy, the trustee will compare your household income to the federal guideline established for a household of your size. If your income is higher than this federal guideline, you may be required to pay 50% of your surplus income towards your debts each month for close to two years. This alone will repay a portion, if not all of, your debts.
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What Happens When You File For Bankruptcy
If bankruptcy is the option you choose, you will work with the LIT to complete the required forms. The LIT will then file these documents with the OSB and you will be formally declared bankrupt.
From that point on, the LIT will deal directly with your creditors on your behalf. Once you have been declared bankrupt
- you will stop making payments directly to your unsecured creditors
- any garnishments against your salary will stop and
- any lawsuits against you by your creditors will also be stopped
Pro Bono Legal Services
Many local bars do great work for the people who cannot pay the filing fee or need legal aid to reduce the cost of the bankruptcy case. Luckily these bars have a list of some lawyer who is willing to work for the people who are unable to pay all legal process. In a different location, there are different bars and they may have also online contact. You can contact them to make sure you are getting a reduced rate of legal procedure with bankruptcy.
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Dont Let The Cost Of Bankruptcy Stop You From Getting More Informationcontact Us
The costs and fees of bankruptcy are very similar in each province, but the rules and regulations are somewhat different. Bankruptcy laws are designed to ensure that overall costs are based on someones individual situation.
If youre not sure if you need go bankrupt or not, or if communicating with your creditors might be better, contact us for more information. We can explain how bankruptcy rules affect debt collection in your province and what your options are for dealing with your debts.
Discover your options
Between financial difficulty and insolvency are many options. Our credit counsellors specialize in helping you explore your options and discover which one will work best for you.
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When things get really tough and there doesnt seem to be any hope, it can be helpful to sit down with a knowledgeable credit counsellor who can talk through all your options and make a plan to resolve your difficulties. Many are surprised at the number of options available besides bankruptcy. Once you can see your way out, you can regain your peace of mind and move forward with confidence.
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