Different Types Of Bankruptcy Explained
A Chapter 7 bankruptcy eliminates most debt, including credit card debt, without requiring repayment of any kind. Instead of a repayment plan, the Chapter 7 bankruptcy process liquidates your non-exempt assets to partially repay your debts. A Chapter 13 bankruptcy allows you to keep all of your property as long as the monthly repayment plan pays for the value of your assets. The debts that donât get paid as part of the repayment plan are discharged once the plan has been completed. The discharge of your debts gives you the fresh start you need.
The Chapter 11 bankruptcy process provides similar relief to that provided in Chapter 7 and Chapter 13, but is generally reserved for filers with businesses or significant assets and is a lot more expensive than even a Chapter 13 bankruptcy. This article will focus specifically on Chapter 7 and Chapter 13 bankruptcy.
Filing For Bankruptcy For The First Time
Someone filing for the first time is eligible for an Automatic Discharge from the bankruptcy after a period of nine months. To get an Automatic Discharge, the client has to complete all of their necessary counselling from certified bankruptcy counsellors and other legal requirements. Their approval also cannot be disputed by the Office of the Superintendent of Bankruptcy, by a trustee or by a creditor.
The nine-month period will be extended when a trustee finds that the client has surplus income. The government sets an income threshold based on family sizes. A clients bankruptcy payments are determined by these income thresholds, allowing them to take care of debt while maintaining a reasonable standard of living. However, if they cross that threshold and bring in more money , their rates will increase and their bankruptcy period will expand to 21 months.
With this discharge, a client will be legally released from paying the debts included in the bankruptcy. They will be encouraged to begin their recovery from this challenging time so that they can maintain a level of financial stability in the future.
The Us Trustee Or Bankruptcy Administrator
The U.S. trustee plays a major role in monitoring the progress of a chapter 11 case and supervising its administration. The U.S. trustee is responsible for monitoring the debtor in possession’s operation of the business and the submission of operating reports and fees. Additionally, the U.S. trustee monitors applications for compensation and reimbursement by professionals, plans and disclosure statements filed with the court, and creditors’ committees. The U.S. trustee conducts a meeting of the creditors, often referred to as the “section 341 meeting,” in a chapter 11 case. 11 U.S.C. § 341. The U.S. trustee and creditors may question the debtor under oath at the section 341 meeting concerning the debtor’s acts, conduct, property, and the administration of the case.
In North Carolina and Alabama, bankruptcy administrators perform similar functions that U.S. trustees perform in the remaining forty-eight states. The bankruptcy administrator program is administered by the Administrative Office of the United States Courts, while the U.S. trustee program is administered by the Department of Justice. For purposes of this publication, references to U.S. trustees are also applicable to bankruptcy administrators.
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Western District Of New York Requirements
The Western District of New York is one of the few districts in the nation that requires people filing Chapter 7 bankruptcy in New York without an attorney to provide the court three full copies of all bankruptcy forms in addition to the original signed forms upon filing their case. It has offices in Buffalo and Rochester but holds 341 meetings in a variety of locations within the district. If you have to update any information in your forms by filing an amendment, make sure to file this coversheet along with the amended documents, and follow the instructions regarding service on the bottom of the form.
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Attentive Service Through Your Second Bankruptcy Filing
As a Michigan bankruptcy attorney, I will work with you one-on-one, and make sure you are in full compliance with filing statutes before your petition is submitted. My firm assists individuals Sterling Heights and Warren, as well as inMadison Heights, Royal Oak andClinton Township.
I provide my clients with a very high level of service and can discuss how to proceed with a second filing during afree initial consultation.
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Can You Back Out Of Chapter 13
Chapter 13 comes with a right to dismiss. This means that at any point of your case you can get out of the case and out of the bankruptcy system altogether. So knowing that you have this right to dismiss can make Chapter 13 a more attractive choice when you are trying to decide what type of bankruptcy to file.
What You Can Expect From Your Initial Free Consultation With A Trustee
If you want to learn more about how filing for a bankruptcy would affect you, and whether there are other alternatives that are available to you, booking a free personal consultation with a local Licensed Insolvency Trustee is an easy next step.
The Trustee will discuss your personal situation with you, answer your questions, and advise you on whether a bankruptcy is the right solution in your case, or if a different insolvency solution an alternative to bankruptcy might be more suitable for you.
The consultation is confidential, and also risk-free as you have no obligation to continue to work with the same Trustee in the future, nor can the Trustee make any decisions on your behalf. You will leave the Trustees office with lightened emotional load, knowing you have gotten trusted professional advice.
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How Often Can I File For Bankruptcy
Anyone can have financial difficulties. Sometimes the only recourse a person has is to seek financial relief through the court system. Filing for bankruptcy can help those with debt issues find solutions to problems such as credit card debt, medical bills, and other financial obligations to creditors.
For many, going through the bankruptcy process once is enough to get them back on their feet. These people receive a fresh start and go on to live healthy financial lives. However, for some, perhaps needed financial lessons werent learned or another new set of hardships befell them and they ended up in dire straits again.
Make Sure Bankruptcy Is The Right Option For You
Bankruptcy can offer you a fresh start if you can’t see any other way out of your debt problems. However, going bankrupt may have a serious impact on your day-to-day life, so it isn’t for everyone. Make sure you’ve done your research, taken advice and are sure it’s the best option for you.
Do You Qualify To File For Bankruptcy
If you have questions about your eligibility for bankruptcy, especially if you have previously filed, you should discuss your questions with qualified experienced bankruptcy counsel.
David M. Offen has spent over 20 years practicing bankruptcy law in Philadelphia. He has helped more than 10,000 clients through the bankruptcy process. Call 625-9600 to schedule a free consultation on how bankruptcy can help you to a better financial life.
What Happens To Your Motor Vehicle
Your motor vehicle will be sold to pay for your bankruptcy debts, unless you need it:
- for your work or vocation
- to meet basic domestic needs where alternative transport is not practical
If the official receiver agrees you need the vehicle, it will be classed as exempt and not included in your bankruptcy. This does not apply if you own your vehicle through an ongoing hire purchase agreement .
If you are allowed to keep the vehicle you remain responsible for road tax, MOT and insurance.
If your vehicle is exempt but valuable it can be replaced with a cheaper alternative. The official receiver will use the money from the sale to either pay for the new vehicle directly or give you the money to buy one. You must provide proof of purchase for your new vehicle within 1 month. The guide price for a replacement is £1,000.
Stop the sale of your vehicle
If your vehicle is not exempt you may be able to keep it if a third party can pay to transfer it to them for you and you provide a:
- current insurance certificate
- vehicle registration document
- a valid MOT
The price paid will be the market value of the vehicle but must at least cover the agents costs for the sale of the vehicle.
If you dont want to keep the vehicle the official receiver will dispose of it.
Vehicles under finance agreements
A finance agreement can be a:
- hire purchase
- conditional sale
- leasing agreement
If the trustee decides they wont be claiming the vehicle they will give notice to you and the finance company.
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Postconfirmation Modification Of The Plan
At any time after confirmation and before “substantial consummation” of a plan, the proponent of a plan may modify the plan if the modified plan would meet certain Bankruptcy Code requirements. 11 U.S.C. § 1127, 1193. This should be distinguished from preconfirmation modification of the plan. A modified postconfirmation plan does not automatically become the plan. A modified postconfirmation plan in a chapter 11 case becomes the plan only “if circumstances warrant such modification” and the court, after notice and hearing, confirms the plan as modified. If the debtor is an individual, the plan may be modified postconfirmation upon the request of the debtor, the trustee, the U.S. trustee, or the holder of an allowed unsecured claim to make adjustments to payments due under the plan. 11 U.S.C. § 1127.
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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.
Who Deals With Your Bankruptcy
An Official Receiver is appointed to protect your assets. They act as trustee of your bankruptcy affairs if you have no assets.
If you have assets, an Insolvency Practitioner will be appointed to act as trustee and sell your assets to pay your creditors. To read more, go to:
Once a bankruptcy order has been made against you, your creditors cannot pursue you for payment. The trustee is responsible for payments.
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How Your Creditors Are Paid
The official receiver will take control of your assets unless an insolvency practitioner is appointed. An insolvency practitioner is usually an accountant or solicitor.
The person who takes control of your assets is known as the trustee. The law says you must cooperate fully with them.
The trustee will sell your assets and tell the creditors how the money will be shared. Creditors must then make a formal claim. You cant make payments directly.
If you have assets, money from the sale of these will be used to pay the costs of the bankruptcy process before creditors are paid. If your case is administered by the official receiver the following fees will all be deducted from the money realised:
- an administration fee of £1,990 if you applied for your own bankruptcy or £2,775 if someone else applied
- a general fee of £6,000
- 15% of the total value of assets realised
- a fee charged at an hourly rate where money is paid to creditors
If there are insufficient assets in your case the official receiver will still process your bankruptcy.
Next, money will be used for:
- certain debts in relation to employees, if you had any
- your other creditors
- interest on all debts
Any money left over will be returned to you. If everyone is paid in full you can apply to have your bankruptcy cancelled .
Consider A Consumer Proposal
What are your options if you have declared bankruptcy in the past, and you have new debts? To avoid the additional costs and consequences of filing bankruptcy more than once you could consider a as a way to negotiate a settlement with your creditors. You will avoid a repeat bankruptcy but still find a solution to your current financial problems.
If you find yourself facing the possibility of filing bankruptcy a second or third time, and ask them about your alternatives.
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The Individual Insolvency Register On Annulment
Once notice of the annulment is received your bankruptcy will be removed from the Individual Insolvency Register after:
- 28 days if the bankruptcy order shouldnt have been made
- 3 months if the debts were paid in full or an IVA has been agreed
If an IVA has been agreed, details of this will appear on the register.
Cash Collateral Adequate Protection And Operating Capital
Although the preparation, confirmation, and implementation of a plan of reorganization is at the heart of a chapter 11 case, other issues may arise that must be addressed by the debtor in possession. The debtor in possession may use, sell, or lease property of the estate in the ordinary course of its business, without prior approval, unless the court orders otherwise. 11 U.S.C. § 363. If the intended sale or use is outside the ordinary course of its business, the debtor must obtain permission from the court.
A debtor in possession may not use “cash collateral” without the consent of the secured party or authorization by the court, which must first examine whether the interest of the secured party is adequately protected. 11 U.S.C. § 363. Section 363 defines “cash collateral” as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents, whenever acquired, in which the estate and an entity other than the estate have an interest. It includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a creditor’s security interest.
When a chapter 11 debtor needs operating capital, it may be able to obtain it from a lender by giving the lender a court-approved “superpriority” over other unsecured creditors or a lien on property of the estate. 11 U.S.C. § 364.
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What Happens To Your Assets After Discharge
Assets that are part of the bankruptcy stay under the trustees control when your bankruptcy ends. It can take time for all assets to be dealt with.
You must keep making any payments agreed under an IPA or IPO.
Your family home
If your family home has not been dealt with 3 years after the bankruptcy order, the interest may be given back to you.
If the interest in your family home is returned to you, the Land Registry will be told that the property is no longer part of your bankruptcy estate. The trustee will send notice to the Land Registry and the restrictions will be removed.
The restrictions on your business end when bankruptcy ends, unless the official receiver feels youve been dishonest. They can then apply to extend the restrictions
Reasons To Hire A Lawyer For Church
Not every legal matter requires the use of an attorney. Fighting a speeding ticket and going to small claims courts are two examples. However, in many other situations involving a legal dispute, challenge, or deal, you may not wish to chance the risks of going it alone without the advice of an experienced lawyer who can help you out. In fact, while good legal representation may not be cheap, it can help get you out of a number of sticky situations. While each persons legal situation is different, there are times when you really should hire a lawyer. In fact, failing to work with an attorney in certain instances can lead to broken agreements, lost claims, or even prison time. Below are the reasons to hire an attorney.The Law is Complicated: If youre not a lawyer you probably have no business acting like one in certain instances. Even experienced lawyers typically do not represent themselves in court. Also, attorneys tend to specialize in one or more legal practice areas, such as criminal defense or tax law. A solid case can quickly unravel without the help of a trained and emotionally detached attorney. Similarly, failing to hire a lawyer when starting a business, reviewing a contract, or embarking on other endeavors with potential legal ramifications can result in otherwise avoidable pitfalls.
Dont Ask How Often You Can File For Bankruptcy Ask How Many Times You Can Be Discharged
If you have already filed for bankruptcy and are thinking about filing again, the question you should be asking is not How many times can I file for bankruptcy? but How many times can I have a personal bankruptcy discharged?
It is possible to file for multiple bankruptcies but being discharged is strictly administered. You must meet certain requirements and the timing can often be tricky. If you are considering filing for bankruptcy it is critical that you seek legal advice.
An experienced bankruptcy lawyer will be able to advise you on the best sources of action to take and help you file for a bankruptcy that is most beneficial for your situation.