How Does The Chapter 7 Process Differ From Others
There are several different types of bankruptcy, though the two most used by individuals are Chapter 7 and Chapter 13. About 70% of those who filed for bankruptcy in 2020 filed Chapter 7, with almost all remaining filing Chapter 13. A small fraction filed Chapter 11, which is a reorganization bankruptcy most commonly used by businesses.
Chapter 7 is a much faster process than Chapter 13. Once Chapter 7 is discharged, the court process is finished. The rest maintaining a budget and living within your means is up to you. With Chapter 13, the court, you, your trustee and your creditors agree to a repayment plan that takes 3-5 years. The plan is based on what the court determines your ability to pay is, and if you stick with it, the rest of your unsecured debt is discharged once its completed. If you dont, the bankruptcy is dismissed and youre back in the situation you were in before filing.
Speak With A Professional
The U.S. Bankruptcy Court strongly suggests that those filing get an attorney. Court officials, including judges, are barred by law from offering advice to people whove filed for bankruptcy. The court does have information and documents available for those doing it themselves, legally called pro se.
The Benefits Of Hiring A Bankruptcy Lawyer
While you may represent yourself when declaring bankruptcy, hiring a bankruptcy lawyer can help make the Chapter 7 bankruptcy process more manageable. An attorney from our firm will answer any questions and concerns you have as you go through the process. We can also handle any complexities your case involves.
Our attorney will do the following once you become our client:
- Help you understand the benefits and limitations of filing bankruptcy
- Recommend the best bankruptcy chapter for your financial situation
- Provide information on dischargeable and nondischargeable debts
- Review the bankruptcy consequences for your vehicle, home, and other property
- Define how bankruptcy could affect your taxes, credit report, etc.
Our Lenoir bankruptcy lawyer will also help you complete and file necessary forms, advise you about continuing to pay debts, and familiarize you with relevant laws and procedures. While youre not required to have an attorney present at the Chapter 7 creditors meeting, we can represent you at this legal proceeding and any others during your case.
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How Fast Can A Bankruptcy Be Filed
If your wages are already being garnisheed or you need to stop the creditor from freezing your account or other imminent actions then you may need to file right away. The good news is a bankruptcy can be filed very quickly. In extreme cases it could be done in less than 24 hours, although this is not generally advisable if it can be avoided. Rushed decisions can sometimes backfire if all options or consequences have not been fully considered. Your trustee should never insist you file right away unless there is a good and valid reason to do so like a wage garnishment. Otherwise your trustee should explain all your choices and allow you to digest that information and ask more questions to be sure you are making the right choice before requesting you sign any paperwork.
If you have reason to believe that legal action against you might be imminent, contact a local Trustee in Bankruptcy to book a free consultation as soon as possible. Dont let the situation get worse and be forced into bankruptcy. Reviewing all of your debt solutions before the situation gets dire is the best way to prevent stress and ensure that youre not scrambling last minute.
Failure To Make Payments
In a Chapter 13 case, the debtor is required to make payments under the payment plan to a trustee, who will then distribute those payments to creditors holding proper claims.
However, the debtor is also expected to keep current on their house payments, property taxes, income taxes, and domestic support obligations like alimony and child support. If the debtor fails to keep any of those payments current, the court will dismiss the case.
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Mar How Fast Can A Bankruptcy Be Filed
People thinking about filing bankruptcy often think about doing it on their own the reasoning is that if they could afford a pricey lawyer, they wouldnt be in bankruptcy.
But consider this, if nothing else. If you do it on your own youre going to spend a ton of time getting the papers filed. Forget the crushing burden of paperwork, forms, back-up documentation, bills, pay stubs, tax returns and the like youve got to get together in order to make it all happen.
No, Im talking about the time it takes to go to the courthouse, stand on line, pay the filing fee, get the papers stamped, and tell everyone who needs to be told about the filing.
This could easily take you from 2 to 8 hours, depending on how far you live from the court. Add in the time lost from work and the sacrifice of your wages or precious sick/vacation/personal time, and youve got some real problems. Because we all know time is money.
Now lets look at how long it takes a bankruptcy lawyer to file a case.
Ready for this?
When Spending Cash Before Filing For Chapter 7 Or Chapter 13 Bankruptcy Is Okay
You can spend cash before bankruptcy if you’re using it to pay for necessary bills because you have the right to pay for the things you need to work and live. However, you should avoid incurring new debt and take care not to pay one creditor off while leaving the others high and dry.
For instance, the bankruptcy trustee responsible for your case likely won’t object to using cash for food, school supplies, needed work clothes, rent, or your cellphone bill. And if money is tight, you can sell your property and spend the cash on the things you need. But keep good records in case the bankruptcy trustee asks about the transactions.
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Negotiating With The Trustee
Most Chapter 7 bankruptcy cases are what is called “no-asset” cases, which means everything the filer owns is protected through bankruptcy exemptions. Exemptions are specific to where cases are filed and vary by state law. Exempt property can’t be taken from the filer.
Nonexempt property is not protected through Chapter 7 bankruptcy and can be taken by the trustee and sold to pay back your unsecured debt. If a bankruptcy filer wants to keep otherwise nonexempt property, they can usually pay the trustee the value of the property. This is generally an option because the creditors will ultimately get the same amount whether the nonexempt asset is sold by the trustee or is bought by the filer.
How Fast Can I File Bankruptcy
You can file bankruptcy in as little as two hours if its an emergency. Most of the time, you dont have to file that quickly and, I dont recommend waiting until the last minute. But I understand that pressure that youre under and that time flies in a crisis.
Most of my clients file bankruptcy within 1 6 weeks of their first appointment. It also depends on your payment plan and the issues in your case.
Regardless of whether you file bankruptcy in two hours or two weeks, I use a cooperative process that ensures the accuracy of your petition and provides you with the knowledge and information you need to make an informed decision.
If you are considering bankruptcy, you should contact my office for a free consultation. The consultation is a no risk no obligation opportunity for you to figure out if bankruptcy is right for you. Even if you dont retain me that day or dont plan to file for a year, its good to have an existing relationship with a bankruptcy attorney who you trust, because your situation can change rapidly.
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Examples Of Who Is Right Or Wrong For Chapter 13 Bankruptcy
Quinn’s case: Quinn would consider Chapter 13 if she didn’t qualify for Chapter 7 because, depending on her income, she’d probably pay less toward the credit card and student loan debt while paying off the nondischargeable licensing fees.
Aurora’s case: Aurora isn’t considering Chapter 13. It doesn’t make financial sense. Not only would she have to pay 100% of the debt she owes, but she’d have to pay up to 10% in trustee fees, as well.
Chapter 13 might be a good option for Declan. His ex-wife is threatening to use a wage garnishment to collect the child support he owes. Not only would it be embarrassing, but it would take a more significant chunk out of his pay than the $334 plan payment. Plus, because all of his property is exempt, his monthly payment will remain low.
So What Is Chapter 7 Bankruptcy Exactly
Chapter 7 bankruptcy allows you to erase overwhelming debt and get a fresh start managing your finances. It can relieve you of the responsibility to repay your creditors and eliminate most or all your current debt. This option is designed to give debtors a clean financial slate.
A critical benefit of filing bankruptcy is that all debt collection efforts must stop as soon as you file. This benefit can provide relief from demanding letters and phone calls that only add stress to an already challenging financial situation.
Another advantage of Chapter 7 bankruptcy is that it does not require you to file a repayment plan. Instead, you are allowed to retain your assets, and the courts discharge all your qualifying debts.
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Dismissing A Bankruptcy Case Without Discharge
Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. He earned the Chartered Financial Consultant® designation for advanced financial planning, the Chartered Life Underwriter® designation for advanced insurance specialization, the Accredited Financial Counselor® for Financial Counseling and both the Retirement Income Certified Professional®, and Certified Retirement Counselor designations for advance retirement planning.
When you choose to file a bankruptcy case, regardless of what type of bankruptcy you file under, there will be one of two outcomesdischarge or dismissal.
Most people who file a bankruptcy case have one goal in mind, and that is to relieve financial stress by discharging their debts. When your debts are discharged, the filer debtorin a bankruptcy caseno longer has any personal liability on the debt.
Will Your Discharge Be Opposed
The discharge from bankruptcy is usually granted if you are earning only enough income to keep yourself and your dependants reasonably provided for, and if you have received .
Occasionally, creditors, the Trustee, or the Superintendent of Bankruptcy oppose a bankrupts discharge. When this happens, the matter goes to mediation or is heard in Court. Opposition to discharge is not common, but can happen if it is believed that you did not deal honestly with your creditors or with the Trustee, or if you have not completed your duties in bankruptcy.
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Alberta Bankruptcy Pros And Cons
Before filing for bankruptcy, you should be aware of the major pros and cons associated with this debt solution. The most obvious advantage is that most of your debts are eliminated in bankruptcy. Alberta residents also enjoy peace after a bankruptcy is discharged because debt collectors can no longer hound you for debts written off in the bankruptcy process.
On the other hand, a significant drawback to personal bankruptcy is that it negatively impacts your credit for around 7 years . In fact, you will find it difficult to get new loans and other extensions of credit during those seven years if you file for bankruptcy. A bankruptcy will also leave you with very few personal belongings. For example, a bankruptcy only allows you to keep clothing and other basic items beyond the bare essentials if such things are necessary for employment. You will also have to surrender your car if it is worth more than $5,000. Other exemptions apply. Finally, filing for bankruptcy in Alberta does not eliminate all of your debt. You will still have to pay alimony, your mortgage and student loans if it has been less than seven years since you attended classes.
Creditors Notified That Bankruptcy Proceeding Have Commenced
On the same day the Licensed Insolvency Trustee receives the Certificate of Appointment, you are entitled to a stay of proceedings with respect to civil suits brought against you by unsecured creditors. At this point youre also granted a stay of proceedings with respect to wage garnishments against you.
The Licensed Insolvency Trustee has five days from the date of appointment to notify your creditors that bankruptcy proceedings have commenced. At this point in time, it is possible for creditors who oppose your discharge to attempt to have a your bankruptcy proceeding annulled. However, this rarely happens. Creditors who oppose a bankruptcy are much more likely to oppose the discharge later in this process.
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How Long Does Bankruptcy Last In Canada
Not forever, fortunately. Bankruptcy is a legal process that is intended to provide a new financial start, without being unnecessarily punitive.
Your bankruptcy ends when you receive a discharge, the event that actually cancels your debts.
Several factors affect the length of personal bankruptcies in Canada.
How Long Does Bankruptcy Last In Canada?
First-time bankrupts who make very little income are often eligible for discharge after the legislated minimum period of nine months. However, your bankruptcy will last for more than nine months if you make surplus income, or if this is not your first bankruptcy.
Filing For Bankruptcy: The Bankruptcy Process
While most people hire a bankruptcy lawyer to prepare their bankruptcy paperwork and guide them through the process, it’s possible to do your bankruptcy yourself if it’s simple enough. You can get a feel for your case’s complexity using our bankruptcy quizwe’ll alert you to issues you might want to run by a bankruptcy lawyer.
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Find Out About Bankruptcy Chapter Choices Pitfalls To Avoid Life After Bankruptcy And More
Filing for bankruptcy will get your finances back on track, but the rules can be complicated if you don’t understand the bankruptcy process. You’ll want to start by learning the following:
- how each bankruptcy chapter works
- what to doand not dobefore filing, and
- what to expect during and after bankruptcy.
Also, be sure to read the frequently asked questions after each section. They’re the questions people search for regularly online, so you’ll probably find the answers you’re looking for, too.
Navigating Your Bankruptcy Case
Bankruptcy is an unusual area because it’s essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can’t skip a step.
One way to keep track of your research is to use the bankruptcy forms as an outline. You’ll find links to resources in the chart below. You can also look at the list of Chapter 7 and 13 bankruptcy forms to see where this topic fits in the bankruptcy scheme. And this handy bankruptcy document checklist will help you gather the things you’ll need to complete the petition.
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Bankruptcy Information |
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What Bankruptcy Will Affect While On Your Credit Score
Your payment history, on-time payments, and recent credit reporting can all affect how lenders work with you.
Once you file bankruptcy and businesses see your credit report’s negative information, you may have concerns about:
- Getting a car loan
- Getting loans without a qualified co-signer
- Adding authorized users to some credit cards
- Security deposits and returns of safety deposits
You have options regarding all these concerns if you are having credit or debt issues. There are ways to address each concern by yourself or with professional help. Getting a fresh start is possible, especially after filing bankruptcy.
How Often Can You File Bankruptcy
For most people, is a once in a lifetime event. Unfortunately, sometimes things happen and you may be finding yourself once again facing financial hardship and looking at the possibility of filing bankruptcy a second time. If so, you are not alone. Approximately 10% of bankruptcies are for individuals who, for one reason or another, needed to file bankruptcy more than once.
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Second Counseling Session Two Months Before Date Of Discharge From Bankruptcy
Its common for Licensed Insolvency Trustees to meet with you approximately two months prior to the anticipated date of discharge. Pursuant to section 170 of the Bankruptcy and Insolvency Act , Licensed Insolvency Trustees have an obligation to submit a report to the Bankruptcy Court advising whether or not your discharge is opposed, and if it is opposed, who is opposing it.
If no one opposes your discharge, your are deemed to be discharged 60 days after the Licensed Insolvency Trustees section 170 report.
If your discharge is opposed, there will be a delay as the file will stand in a queue to be heard in Bankruptcy Court. Delays could take up to 11 months before you receive a discharge from bankruptcy.
Discharging Debts In Bankruptcy
A bankruptcy discharge releases a debtor from being personally responsible for certain types of debts. So, after a bankruptcy discharge, the debtor is no longer legally required to pay any debts that are discharged.
The discharge prohibits the creditors of the debtor from collecting on the debts that have been discharged. This means that creditors have to stop all legal action, telephone calls, letters, and other type of contact with the debtor. This prohibition is permanent for the debts that have been discharged by the bankruptcy court.
You cannot discharge all debts in bankruptcy. Some of the most common debts that you cannot get rid of in bankruptcy are debts from child or spousal support, most student loans, most tax debts, wages you owe people who worked for you, damages for personal injury you caused when driving while intoxicated, debts to government agencies for fines or penalties, and more.
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