Going Through The Bankruptcy Process
Once the bankruptcy court has approved your petition, you will automatically benefit from bankruptcy protection, and the stay shall be effective. It prohibits creditors and debt collectors from demanding payments from you and will essentially stop wage garnishment and protect you from creditor harassment.
When you declare bankruptcy, you will be required to undergo a . The completion of the courses is needed to file bankruptcy Chapter 7 and receive a bankruptcy discharge. The courses usually take up to 90 to 120 minutes and will teach you valuable financial management skills that will help you restore your credit rating.
Is Bankruptcy The Best Solution For Your Current Situation
In order to determine if bankruptcy is the best solution to your current situation you must first determine if you are qualified to file a Chapter 7 case. Chapter 7 bankruptcy is what most people think of when they are considering filing a bankruptcy, which is a total liquidation. In a Chapter 7 case you can walk away from your debt in a relatively short period of time and get a fresh start.
How Much Debt Does It Take To File Bankruptcy In Canada
Bankruptcy is seen as the last resort by many people in need of financial help.
It is a dramatic step to take, completely altering your financial life.
Did you know that bankruptcy stays on your credit report for 6 years, even after youve been discharged?
This can severely impact your life, which is why many people are advised to avoid it at all costs.
With that in mind, you may assume that you need a substantial amount of debt to file for bankruptcy in Canada.
Truthfully, the laws state that you only need $1,000 of debt.
If you owe this amount or more you can trigger bankruptcy proceedings and clear your debts.
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Have I Exhausted All Other Options
There are a lot of things you can do to avoid bankruptcy. Make sure you consider these steps:
- Contact your lenders to see if they can work out a payment plan. Most lenders would much rather do this than have to forgive your debt completely when you file for bankruptcy.
- Sell some of your assets. You may be surprised at how much cash you can raise to pay off your debts.
- Eliminate all unnecessary expenses. Take a good, hard look at your spending. Are you spending a lot of money eating out? Do you really need that large cable tv package? Put together a budget and stick with it. Anything you dont absolutely need may have to be cut at least temporarily so you can put more money toward your debt.
- Sign up for credit counseling. Before you file for any kind of bankruptcy, you have to undergo counseling from a government-approved agency. It must include a two-hour financial management course. All of this has to be completed no more than 180 days before your bankruptcy discharge.. Its a worthwhile process sometimes credit counseling services can help people avoid bankruptcy altogether.
Is Bankruptcy Your Last Resort
When youre drowning in debt, bankruptcy relief may seem like the easy way out. This is especially true if you have lost your job or youre struggling to make ends meet every month. Many people make the hasty decision to file for Chapter 7 just to get instant relief from all the financial stress and avoid exhausting debt collectors.
It is very important, however, to look into the future after your bankruptcy. Will you be able to cover your expenses after your debts are discharged? Or will you still be out of pocket?
You should ask yourself this because there may be other options to cover your debt payments instead of a bankruptcy filing. For example, you can explore ways on how to make money on weekends or how to make money without a job.
When you file under Chapter 7, you cannot file again until after 8 years. So if your total debt is not that high, you might want to save that bankruptcy court filing for future use just in case you get into worse circumstances.
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How Does Filing For Bankruptcy Affect Your Credit
Filing for bankruptcy is one of the worst things you can do for your credit since it’s a signal to future creditors that you were unable to meet your debt obligations. Fortunately, a bankruptcy filing doesn’t leave a permanent mark on your credit reports, and you can start rebuilding your credit while you’re trying to get your finances in order.
No matter whether you’ve filed for Chapter 7 or Chapter 13 bankruptcy, it’ll show up on credit reports for card issuers and other lenders to see. Chances are, lenders will take your bankruptcy into consideration when you apply for credit. Once you’ve wrapped up the bankruptcy process, your credit reports will indicate that the bankruptcy and the debts covered by your filing have been discharged.
A Chapter 7 bankruptcy will stay on your credit reports and affect your credit scores for 10 years from the date your court case is filed a Chapter 13 bankruptcy stays on your credit for seven years. As time goes by, however, a bankruptcy’s effect on your scores slowly decreases.
When you apply for credit, lenders might not OK your application unless the bankruptcy has been discharged. Even then, you might find it difficult to obtain certain kinds of loans. If your application does go through, you might be confronted by high interest rates and other less-than-favorable lending terms.
How Much Debt Do I Need To File For Bankruptcy
Many people think that they must have a ton of debt in order to file for bankruptcy. This is not true. For the majority of individuals and couples filing for bankruptcy, there is no minimum amount of debt that is required in order to file. You can have as little as $1,000 of debt or as much as $100,000 of debt and you will be able to file for bankruptcy. The Bankruptcy Code does not base filing eligibility on your debt amount. Rather, whether you can file for bankruptcy is based on a legal test called the “Means Test,” which is based on your household income and household size. So, as long as you pass the Means Test, you can file for bankruptcy and wipe out all of your debt, no matter how small or how big. This is the general rule for filing a chapter 7 bankruptcy.
Before you decide if you should file for bankruptcy, whether chapter 7 or chapter 13, you should speak with an experienced bankruptcy attorney. The attorney will be able to explain the differences to you and advise which chapter will be more beneficial for you and your family. We are trusted bankruptcy attorneys who have filed hundreds of cases, with every chapter 7 bankruptcy receiving a successful discharge. Atlantis Law has a Rancho Cucamonga office and a Riverside office, and we can meet with you for a free consultation to discuss your options. Contact us today for more information and to schedule your consultation.
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Social Security Number Not Necessary For Bankruptcy
A question thats commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, Your Statement About Your Social Security Numbers , which asks debtors to list their current and prior Social Security numbers. The new bankruptcy
Filing For Bankruptcy A Second Time Get A Free Consultation
Filing bankruptcy can be complicated and depend on the nuances of your situation. know what you are going through and the most effective path to move forward.
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How Much Do You Have To Be In Debt To File Chapter 7
You do not have to be in a specific amount of debt to file Chapter 7 bankruptcy. Your income might play a role in your ability to file for Chapter 7 bankruptcy protection, and you might be required to complete a means test to determine your eligibility.
How Much Debt Is Needed To File Bankruptcy In Arizona
A lot of people arent sure when enough is enough. When it comes to bankruptcy, how bad does the situation have to get before you decide to file a Chapter 7? The answer to that question is different for everyone. Some people have been struggling with debt for years. Others have never been in this position before. The COVID-19 pandemic has changed the financial landscape for a lot of people. Families who used to enjoy two-parent incomes are now down to one parent working part-time from home. People are using their meager savings to pay living expenses. Others are living off of their credit cards. Most of these people have no idea that a bankruptcy lawyer in Arizona can help.
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The Average Cost Of Chapter 7
If paying down your debt has become an insurmountable challenge, filing bankruptcy can help you get your finances back on track. Chapter 7 bankruptcy allows you to eliminate any amount of debt, including credit cards, medical bills or personal loans. Chapter 13 allows you to pay your debts down over time. Whether or not you should file bankruptcy ultimately depends on how much debt you owe, your income and the value of your assets.
What Cannot Be Discharged Through Bankruptcy
Before continuing, not every kind of debt can be absolved by bankruptcy.
These are some of the debts that cannot be discharged:
- Fines or penalties owed to government agencies
- Alimony or child support
- Personal Injury debts from accidents, such as drunk driving
- Certain kinds of property or income tax
- Loans from retirement plans
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Print Your Bankruptcy Forms
Once you have prepared your bankruptcy forms, you will need to print them out for the court. You must print them single-sided. The court wonât accept double-sided pages. You will also need to sign the forms once they are printed.
You will need:
Your paycheck stubs
If needed, your application for a fee waiver or installment plan
Most bankruptcy courts require just one signed original of the petition, but some courts require additional copies. So, before you head out to submit your forms, to find out how many copies you will need to bring and confirm you have all the required local forms.
How Much Debt Do I Need To File For Chapter 7
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In a Nutshell
There’s no such thing as too much or too little debt for Chapter 7 bankruptcy. But, there are a lot of important factors to consider when determining if filing bankruptcy now is the best debt relief solution for you.
Written byAttorney Eva Bacevice.
There is no threshold amount that you need to reach to file a bankruptcy. Some chapters of bankruptcy have debt limits, but there is no such thing as a debt minimum. That being said, you certainly can and should evaluate if filing a bankruptcy makes sense in your current situation.
The better question to ask is do I qualify for a Chapter 7 and will it afford me the relief I am seeking?
Does It Make Sense To Go Bankrupt
You may look at that figure and realize that you have at least $1,000 in debt.
Does this mean you should file bankruptcy in Canada?
The answer is not crystal clear as it really depends on the individual.
You have to be in a very bad financial situation, probably with no source of income, a family to feed, and so on.
For the majority of people with this much debt, other solutions can be found.
If youre struggling to make repayments, a debt restructuring plan can be looked at.
Similarly, a debt consolidation loan can pay off the debt and give you a more manageable loan to deal with.
Ultimately, you have to compare the costs of bankruptcy with the costs of dealing with debts in other ways.
Bankruptcy is not a free service.
In Canada, the cost varies depending on how much work needs to be done.
The absolute minimum fee is $1,800, which can be split across 9 months into payments of $200.
Instantly, you can see that paying for bankruptcy would cost more than paying your $1,000 debt.
Plus, factor in the impact this has on your credit score.
It stays with you for 6 years, inhibiting the ability to apply for credit.
Any plans you had to buy a house are suddenly put on hold as most mortgage lenders wont approve applications with a bankruptcy on them.
Different Types Of Bankruptcy
For individuals, there are two main types of bankruptcy cases. Most individual debtors file for Chapter 7, which can also be described as âstraightâ bankruptcy or âliquidation.â Under this plan all non-exempt assets are converted to cash , and secured creditors may have the item they financed turned over to them , unless the debtor reaffirms the debt with the courtâs approval prior to obtaining a discharge. Chapter 13, also called âreorganization,â is an option for people with regular income and debts that are less than the limits allowed by law. When you complete a Chapter 13 plan, you have the satisfaction of keeping your assets, paying your creditors, and possibly discharging some of your debts.
Bankruptcy is a serious step. If you choose to file Chapter 7 or Chapter 13, you will probably need to hire an attorney. Be sure to find an attorney who has experience handling the type of bankruptcy case you plan to file. The following overview of Chapter 7 and Chapter 13 will give you some idea of whatâs involved.
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How To Seek Professional Advice
You don’t have to go it alone when you’re weighing whether to file for Chapter 7 or Chapter 13 bankruptcy and, then, if you decide to proceed. Check out these resources.
- Bankruptcy attorney: You can file for bankruptcy without a lawyer, but you might want to visit with a lawyer if you’re unsure how to move forward.
- : A credit counseling agency might be able to work with you on a debt repayment plan so you can avoid bankruptcy. The U.S. Department of Justice maintains a list of federally approved credit counseling agencies.
- Financial advisor: A financial advisor might be able to guide you through establishing a budget and creating a debt repayment plan.
Preparing For Chapter 7 Bankruptcy
Theres some protocol to follow in the months before filing for bankruptcy. Failing to follow these instructions could undermine your efforts.
Dont Pay Creditors It seems counterintuitive and you should definitely make routine payments. But any large or unusual payments could be viewed as preferential transfers. That means one creditor has benefited unfairly over others.
No New Debt A new creditor could claim you took out a loan or ran up the balance on a credit card without intending to pay it back. Legally, thats fraud and it will not be forgiven.
No Unusual Transactions Dont stray from the routine. Dont transfer titles of cars or homes. Dont buy luxury goods. Dont transfer your business or remove your name from it. They can all be classified as fraud.
Be Truthful You are required, while filing for bankruptcy, to provide full and complete information. You must disclose any debt, assets, accounts or other financial information. Failure to comply could lead to fraud and potential criminal charges.
Dont Touch Retirement Funds You are generally allowed to keep retirement plans and accounts, so keep them safe while considering bankruptcy and dont use those funds to pay down debt.
Never think you can get away with something sneaky or dishonest. Your bankruptcy lawyer is always a good resource for what you should and shouldnt do.
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How Much Debt Do You Have
After figuring out what you can and cannot get discharged from bankruptcy, the next step is acknowledging how much debt you have.
Here are some important questions to ask yourself when considering bankruptcy:
- Can you repay your debt without bankruptcy? If there is a way to pay your debts without jumping through the hoops of going through bankruptcy, you may want to consider it. There are debt alternatives to bankruptcy that can also help you achieve financial relief.
- Are creditors willing to negotiate with you on your settlements? If your creditors are willing to work with you on your debt, you may be able to avoid bankruptcy.
- Are the debts you want to absolve eligible for discharge? Making sure your debts are eligible for a discharge is key before you make any decisions to try and eliminate them.