Filing For Chapter 7 Bankruptcy In Maine: Getting Started
Important! This information is for individuals who need to file for bankruptcy and who cannot get help from a lawyer. Important steps you need to take before trying to file for bankruptcy on your own:
If you have taken all of the above steps and have no other options left but to file on your own, then you may want to use this information to help you get started.
This information will not help you if you need to file under Chapter 11, 12 or 13 of the Bankruptcy Code. This information is for Chapter 7 filers. If you are not filing under Chapter 7, we recommend again that you get a lawyer.
Thanks to William Sandstead, an experienced bankruptcy attorney with offices in Portland, for his help in developing this information.
Ontario Bankruptcy And Insolvency Statistics
- 38,856 consumers in Ontario were insolvent in 2018
- 38% of those consumers went on to declare bankruptcy
- Average assets at the time of filing: $30,774.14
- Average liabilities at the time of filing: $98,577.12
- With an average household income of $74,287 in Ontario, the average filer effectively owed $1.33 for every dollar they earned
Chapter 13 Bankruptcy For A Sole Proprietorship
Chapter 13 works for sole proprietorships essentially the same way it does for individuals: Businesses that have a steady, reliable income can ask the court to approve a repayment plan lasting between three and five years.
At the end of the agreed-upon plan period, if you are current with your debts, the balance will be discharged erased and you may continue operating without oversight from the court.
A key consideration for any sole proprietor considering Chapter 13: You retains your assets, both personal and business-related.
Small business owners must qualify, however. They cannot have more than $419,275 in unsecured debt, and $1,257,850 in secured debts .
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How Much Do You Have To Be In Debt To File Chapter 7
Filing bankruptcy is not something to be taken lightly just because you have some debt that youd like to erase and start over is not a reason for filing bankruptcy.
You may be wondering, Should I file bankruptcy? While there is no definite threshold and every situation is different, a general rule of thumb is that if your debts total more than half of your annual income and/or you dont see a clear path for paying them off within 5 years, then filing for Chapter 7 bankruptcy might be your best bet as a way to protect your credit for the long run. Your ability to file Chapter 7 bankruptcy will also be based on your disposable income in relation to your income, which we will cover in more detail later.
So in a nutshell, when to file bankruptcy will be different for each person, but will depend on how far in debt you are and how insurmountable that debt seems.
Bankruptcy Laws In Ontario
- The Ontario Executions Act defines which assets are exempt from bankruptcy, besides those defined under the Bankruptcy and Insolvency Act.
- The Ontario Limitations Act defines the statute of limitations for debts that were sold to a collector. In most cases, the statute expires after two years. If a debt is past the statute of limitations, you may not need to file bankruptcy to deal with that debt.
- The Personal Property Security Actrequires creditors to register their interest in any assets that you put up as collateral. Your bankruptcy trustee will search the PPSA database to make sure no creditors have claims to your assets before they can sell them.
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The Truth About Bankruptcy
If youre reading this, youre probably thinking about bankruptcy. The world may tell you this route is a fresh start . . . or a horrible ending. But whats the truth about bankruptcy?
In simple terms, bankruptcy is a legal process a person can go through to clear some of the debts theyre unable to pay.
If youre so overwhelmed by debt that bankruptcy feels like your only option, know these three things: 1) There is hopeand you will be okay. 2) There are other optionsand you should try every single one before jumping into bankruptcy. 3) Bankruptcy does not define you and will not be the end.
Keep these three things in mind as you read through the rest of this article and learn the truth about bankruptcy, including a breakdown on these specific topics:
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How Does Bankruptcy Affect My Credit Rating
Bankruptcy will remain on your credit report for 6 years after discharge. Bankruptcy can affect how future lenders view your creditworthiness, but this impact is temporary. While your credit score will drop immediately after filing, you can often get a secured credit card while bankrupt. This will be reported on your credit report as new, and positive, credit history. After your bankruptcy, you can apply for additional credit lines and you will see a slow and steady improvement in your score.
Bankruptcy also has the advantage of ridding you of debts that are causing your current financial hardship. Falling behind on payments and having past due bills sent to a collection agency if you cant repay your bills will also negatively affect your credit score and can be hard to overcome without bankruptcy if your debts are large.
The purpose of filing bankruptcy is to gain a fresh financial start. Eliminating debt means you can begin the process of rebuilding your credit after bankruptcy and create a stronger financial future. If you take the right steps to rebuild, you will see your score rebound.
How Do I Contact The Bankruptcy Court
The Bankruptcy Court Clerks Office is located in Burlington, Vermont. The address is: Federal Building, 11 Elmwood Avenue, Room 240. The public counter in Burlington is open Mondays through Fridays from 8:30 a.m. to 5 p.m. You may call the Clerks Office at 802-657-6400. You may leave a message on the Clerks Office answering machine after business hours. In your message, be sure to include your name, contact number and the best time to call you back. The court also has its own website at www.vtb.uscourts.gov. It contains plenty of helpful information and links.
Remember: The court and the Clerks Office cannot provide you with legal advice!
Adapted from the Vermont Bankruptcy Court website. Revised March 22, 2019.
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Should I File For Chapter 7 Bankruptcy
- Read this in:
Learn about the pros and cons of filing for bankruptcy and what types of debts you can discharge. #0103EN
What is bankruptcy?
It is a legal process to help people who are unable to pay their outstanding debts.
How are Chapter 7 and Chapter 13 bankruptcies different?
Chapter 7: the court cancels your debt. Your bills vanish. You are no longer responsible for them. You get a clean slate and a chance to start over with no debt.
Chapter 13: the court puts you on a 3- to 5-year payment plan to repay your debts. This can help you try to avoid foreclosure of your home or to pay off other debts, such as traffic tickets or legal financial obligations , that you cannot discharge.
My wages are being garnished. Can a bankruptcy help?
Probably. The day you file for bankruptcy, the court issues a stay. This means all collection action, including garnishment, must stop immediately.
Which bills can I discharge in a Chapter 7?
You can discharge most bills, including credit card debt, hospital and medical debt, debt owed to a former landlord, and debt owed due to the repossession of a vehicle.
You cannot discharge:
Traffic tickets and fines . Read My Drivers License was Suspended. Can I Get it Back? to learn more.
When should I think about Chapter 7 bankruptcy?
You can only file for bankruptcy once every 8 years. Before filing for Chapter 7, at least 1 of these should be true:
If you are a homeowner:
When do I not need bankruptcy?
Exemptions For Your Home
In British Columbia, homeowners exemptions are higher if you live in Vancouver or Victoria. In this case, $12,000 of the equity in your home is protected in Greater Vancouver and the Victoria capital area. Elsewhere in the province, $9,000 in home equity is exempt from bankruptcy. For more information on bankruptcy exemptions in British Columbia, you can request a call from a local Licensed Insolvency Trustee.
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When Should I Declare Bankruptcy
When asking yourself Should I file for bankruptcy? think hard about whether you could realistically pay off your debts in less than five years. If the answer is no, 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 forever. If some combination of bad luck and bad choices has devastated you financially, and you dont see that changing in the next five years, bankruptcy is your way out.
Even if you dont qualify for bankruptcy, there is still hope for debt relief. Possible alternatives include a debt management program, a debt consolidation loan or debt settlement. Each one of those choices typically require 3-5 years to reach a resolution, and none of them guarantees all your debts will be settled when you finish.
Remember that bankruptcy carries significant long-term penalties. It is stuck on your credit report for 7-10 years, which can make getting loans in the future very difficult.
The flip side of that is there is a great mental and emotional lift when all your debts are eliminated, and youre given a fresh start.
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.
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Respond To The Statement Of Claim
Theres a good chance that, upon receiving a Statement of Claim, you ask yourself this question: should I respond to it, or ignore it?
Theres an easy answer to that question: dont ignore your Statement of Claim! Respond to it within the allotted time frame, filling out everything you are required to. If you ignore a Statement of Claim the court will issue a default judgement against you, automatically taking the plaintiffs side.
What Happens To Your Credit Score After Filing Bankruptcy
Chapter 7 bankruptcy and Chapter 13 bankruptcy filings show up on your credit report. How long it shows up depends on which type of bankruptcy you file. Chapter 7 bankruptcy stays on your credit report for 10 years after the filing date. A completed Chapter 13 bankruptcy stays on your credit report for 7 years after the filing date, or 10 years if the case was not completed to discharge.
As a result, filing bankruptcy will initially lower your credit score. How much your credit score will drop depends on how high or low it was before bankruptcy. Generally, a decrease between 100 to 200 points can be expected.
The good news is that you can begin rebuilding your credit as soon as your bankruptcy discharge is entered. It’s possible to have a better score within 1â2 years of filing. The credit scores of most bankruptcy filers are already lower because of missed payments. After the court grants a discharge, most unsecured debts are erased. Credit scores improve because there are no more missed payments and discharged accounts show a zero balance.
After Chapter 7 and Chapter 13 bankruptcy is filed, you will get credit card offers in the mail. These offers can be for secured credit cards, sometimes called prepaid cards, which require a cash deposit. Or, offers can be for unsecured credit cards, but will likely have high interest rates or annual fees.
Bankruptcy Exemptions For Farmers
Up to 160 acres of land is exempt if your principal residence is located on that land and is part of your farm. Any personal property necessary for your farming operations over the next 12 months is also exempt from bankruptcy. For more information about bankruptcy exemptions in Alberta, please speak to a local Licensed Insolvency Trustee.
What Assets Are Exempt From Bankruptcy In Ontario
When you file for bankruptcy in Ontario, you dont need to be concerned that you will lose everything. These assets are exempt under federal and provincial law:
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Consult With Legal Counsel
Upon being sued for credit card debt, you really have three options: let the creditor win by default, file a defense to the lawsuit by representing yourself, or file a defense to the lawsuit with the assistance of a lawyer.
If you choose to fight the lawsuit and file a defense, we recommend hiring a lawyer. Your chances of having a successful outcome increase greatly when represented by a legal counsel they have a good understanding of the ins and outs of debt-related lawsuits, and will come up with your best line of defense and argue it for you.
Bankruptcy Exemptions In New Brunswick
- Furniture, household furnishings and appliances up to $5,000
- No limit on clothes for you and your family
- Enough food and fuel for you and your family for three months
- Tools used by you in the practice of your trade up to $6,500
- One motor vehicle up to $6,500, if needed for employment
- Dogs, cats, and other domestic animals belonging to you
- No limit on medical or health aids for you and your family
- Certain government pension plans are exempt from bankruptcy
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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.
What Is The Downside Of Filing For Bankruptcy
First of all, of course, you will be liquidating a large portion of your property, which can be challenging. The exemptions can help, but you will still have to start over in some areas. And as noted earlier, it doesnt take care of all the debt, such as student loans and family support, which youll need to continue paying.
In addition, the bankruptcy will sit on your credit report for 7 10 years, and its likely to make it more difficult to seek a mortgage or a personal loan. And some landlords or employers may check your bankruptcy status and look less favorably on it when comparing you to other candidates.
Thats why the timing of filinf bankruptcy is a very personal decision, based on your financial reality and goals.
Find out more here about how long it will take to improve your credit score and read this to see how it can be done!
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