What To Do After Chapter 7 Bankruptcy
Push the re-start button on your financial life.
Thats the first thing anyone should do after having debts discharged in Chapter 7 bankruptcy. Hopefully, that re-start button includes a plan for reduced spending and paying all bills on time.
The easiest way to do that is to draw up a budget that realistically accounts for your income and expenses.
If youre not good at that, call a nonprofit credit counseling agency and get some free assistance from their professional certified counselors. Helping consumers come up with an affordable monthly budget is their specialty.
They can give you the benefit of their training and experience at drawing up monthly budgets, plus tips on how to make the bottom line come out in your favor every month.
If you get in the habit of paying bills on time, you will begin to , and youll regain favor with lenders and credit card companies. A few years of good practice and you and your creditors will forget this ever happened.
Can I File Bankruptcy Without A Lawyer
Yes, you can legally file for bankruptcy without a lawyer. But should you?
Every year, thousands of Americans find themselves too broke to pay off their debts, yet unable to afford bankruptcy. It probably comes as no surprise that attorneys’ fees make up the lion’s share of bankruptcy expenses. So you might be wondering, “Do I really need a lawyer to file for bankruptcy?”
It largely depends on how complex your case is. If you own little property and don’t make a lot of money, it might be possible to file bankruptcy pro se . But while filing for bankruptcy on your own can save you money, it’s a serious undertaking. You’ll have to pull together all of your financial documentation, file a lot of paperwork on time, and communicate with your bankruptcy trustee. You’ll also need to take the time to understand the state and federal laws that apply.
In this section, you’ll find a step-by-step guide to filing for Chapter 7 bankruptcy and a few tips to help make the process as simple and painless as possible.
Filing For Chapter 13 Bankruptcy
For people who have property they want to keep, filing a Chapter 13 bankruptcy may be the better choice.
A Chapter 13 bankruptcy is also known as a reorganization bankruptcy. Chapter13 enables people to pay off their debts over a period of three to five years. For individuals who have consistent, predictable annual income, Chapter 13 offers a grace period. Any debts remaining at the end of the grace period are discharged.
Once the bankruptcy is approved by the court, creditors must stop contacting the debtor. Bankrupt individuals may then continue working and paying off their debts over the coming years, and still keep their property and possessions.
Home Mortgage And Other Property Liens
If you have a lien on the property, such as a home mortgage, you cannot have the mortgage discharged in bankruptcy.
State laws vary, but you can generally keep your home in bankruptcy if you keep making the payments and if you do not have more equity in the home than you are allowed to keep by state law.
Bankruptcy Basics: When Should You File For Bankruptcy
Sometimes, there’s no other option than to file for bankruptcy. But before you do, make sure to assess your situation accurately.
Bankruptcy is a scary proposition. The word “bankruptcy” itself sounds so ominous. The media bombards us with nightmare tales of seemingly solid business giants going from bedrock to bankrupt. Gossip columns never tire of dishing on the latest celebrity inches from bankruptcy. You might even fear that you’re a few steps from going under. But, just how can you tell when it’s time to throw in the towel and declare bankruptcy?
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Select A Licensed Insolvency Trustee To Help You Understand Canada’s Debt Regulations
Licensed Insolvency Trustees are the only people licensed by the Canadian Superintendent of Bankruptcy to administer consumer proposals and bankruptcies.
In order to declare bankruptcy or file a consumer proposal vou must work with a Licensed Insolvency Trustee.
Your trustee will provide information about consumer proposals, the process for filing bankruptcy, and about other debt relief options. Also, during the bankruptcy or proposal process your trustee will ensure your rights are respected.
When selecting your trustee, you should keep the following in mind:
- Your trustee should be local or at least easy to access.
- You should feel comfortable with your trustee. Ask them questions about your situation and make sure you understand their answers.
- Confirm they are licensed by the Superintendent of Bankruptcy .
must work with a Licensed Insolvency Trustee when filing bankruptcy in Canada.
Here on Bankruptcy-Canada you can find and connect with one of the top Licensed Insolvency Trustees that is local to you. We list only Trustees who have shown a long standing ability to help people find debt relief.
How Does Bankruptcy Work
In plain language, this is what happens in personal bankruptcy in Canada: you assign your non-exempt assets to a Licensed Insolvency Trustee in exchange for the elimination of your debts. Certain exemptions that vary by province may allow you to keep some assets such as your home , car, RRSPs, pension plans, furnishings and effects, etc.
As soon as your bankruptcy papers are filed, your creditors are barred from attempting to contact you, and most legal proceedings and garnishments related to your debts will cease. Once you are released from bankruptcy , the debts included in the bankruptcy will be extinguished. Those creditors are legally blocked from approaching you for any further payments.
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Eastern District Of New York Requirements
If you live in this district, make sure to bring a copy of your original bankruptcy forms to the court when first filing your case as two complete sets of everything are needed. If you donât file all of the bankruptcy documents needed for a Chapter 7 bankruptcy in New York at the time you file your Voluntary Petition, you must include this affidavit when filing the remainder of your bankruptcy forms.
In response to COVID-19, this district is making an online portal to submit documents available to folks filing without an attorney. You can access the portal here.
If you amend your claimed exemptions after filing your case, the Local Rules in this district require you to send a copy of the amended Schedule C to your case trustee, the United States Trustee, and all of your creditors. Plus, the amendment is not effective until you file proof that you served all required parties, which must be done within 7 days.
Bankruptcy And Your Credit
- Chapter 7 bankruptcy also known as a liquidation can wipe out many of your unsecured debts, although an appointed trustee may have to sell your nonexempt property to help pay off as much debt as possible. Property that may be exempted from a bankruptcy sale can include vehicles, basic household furnishings and tools you need for work.
- Chapter 13 bankruptcy also known as an adjustment plan or wage-earner plan wont wipe out your debt. Instead, you may be able to repay a smaller amount of debt with a three- to five-year payment plan. Filing Chapter 13 bankruptcy may allow you to keep some property, like a house.
Declaring bankruptcy can be tough on your credit, at least in terms of scoring. And after filing for bankruptcy, your credit reports may be limited to a score range of 300 to 800.
How long does a bankruptcy stay on your credit reports? The record can remain for 10 years after the filing date. But Chapter 13 bankruptcies may drop off your credit reports after seven years if youve completed the payment plan.
If you were behind on payments before you declared bankruptcy, an account may drop off your credit reports seven years after the first late payment that led to a default . This means some of your discharged accounts might drop off before the bankruptcy.
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Surplus Income Adds To The Cost Of Bankruptcy
As mentioned above, you may be required to pay a portion of your monthly income towards your debts via the Trustee, depending on how much you earn and the size of your household. The principle is that if you earn more than your household needs to survive, you must pay a portion of the surplus income to your Trustee for the creditors. The formula used to calculate this is prescribed by law. In simple terms, you will pay about half the amount deemed to be surplus income to your Trustee. Your Trustee can tell you how the surplus income rule will likely apply in your situation.
In general, the greater your income, the greater the cost of bankruptcy and the more attractive the alternatives to bankruptcy become.
What Happens When You Are Declared Bankrupt
A Bankruptcy Inspector from the ISI will serve you with a copy of the Orderof Adjudication and Warrant of Seizure. The Inspector willalso give you a form to complete, requesting various details, which the ISIwill use to contact you and process your bankruptcy.
Your bank accounts will be frozen, except for one current account in whichyou can keep a balance of up to 1,000 for general living expenses.
The ISI will contact all financial institutions and inform them that youhave been made bankrupt.
As soon as your bankruptcy starts, you are free of debt. The OfficialAssignee now owns your assets and administers your estate. Your creditors canno longer seek repayment directly from you. They must deal directly with theOfficial Assignee and all correspondence should be forwarded to him.
You must contribute any surplus income to the Official Assignee.
Your name will appear in the Bankruptcy Register, which is kept in the Office of the Examinerof the High Court. Anyone can check this register.
Read more in the ISIs guide Afteryou are made bankrupt .
The Official Assignee will negotiate an Income Payment Agreement or seek anIncome Payment Order for the surplus of your income over the reasonable livingexpenses for your situation, based on the ISIsguidelines. The agreement or order will last up to 3 years. Act 2015 reduced this period from 5 years, with effect from 29January 2016.)
No deductions will be made from social welfare payments.
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Ppi And Bankruptcy In England And Wales
If you become bankrupt, any successful claims for the mis-selling of PPI will be paid to your bankruptcy estate, and not to you. Dont make any claims yourself as you could end up being out of pocket if you pay any fees or commission to a claims company.
Find out more on the GOV.UK website
Doesnt Filing For Bankruptcy Ruin My Reputation And My Life
Not if it gets you out of debt. You might be able to run from creditors for a while, but eventually the stress of that overwhelms people. Bankruptcy lets you stop running and start over again. It may take a few years for you to get loans and obtain credit again, but at least youll have that opportunity. Bankruptcy is meant to give people who made financial mistakes a second chance. In todays turbulent economy, that is a good thing.
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Do I Need A Lawyer To File Bankruptcy
This is where it gets tricky, but also is very important. The Central District of California in Los Angeles allows online filing for those filing without an attorney, and has since 2014. But the practice has not caught on nationally.
The U.S. Courts website says that you can file on your own, otherwise called pro se. But it cautions that filers must understand the rules and procedures in federal court, the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure as well as the local rules of the court where the case is filed.
Its not simple. Lieberman said that its almost impossible to file Chapter 13 without a lawyer, and judges and trustees generally discourage filing pro se in all circumstances.
Bankruptcy is federal law, Lieberman said. But every jurisdiction has local rules and all the rules are different. If a motion needs to be filed, that motion may be different in Ohio than it is in Kentucky.
Each case differs in details, and Lieberman said a consumer could be hurt by improper filing or not having the right information. He points out that non-federal students loans typically are excluded from bankruptcy, but a lawyer may be able to work out an arrangement.
He remembered a man who borrowed money to go to flight school, but had to give up piloting when a car accident left him impaired. An agreement was worked out between the attorney and filer.
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.
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After You Declare Bankruptcy
When you declare bankruptcy AFSA appoint an Official Trustee to administer your bankruptcy. If youre applying for voluntary bankruptcy, you may nominate a registered trustee. Once a trustee has been appointed youre then protected from any legal action against you from creditors.
At this stage the trustee may sell your assets and take any income you earn over a certain amount to try to pay off all your debts.
You also have a duty to provide information to your trustee such as:
- changes to your conditions
- other requested documents
Alternatives To Chapter 7
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707.
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
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New York Bankruptcy Exemptions
Everything you own is considered an asset in your New York bankruptcy, though only assets not protected by any of the available exemptions can be sold for the benefit of your creditors. As long as all of your assets are covered by the exemptions you choose to use, you can keep everything. If you have lived in the Empire State for at least 2 years when you file bankruptcy, youâre able to choose either New York bankruptcy exemptions or federal bankruptcy exemptions to protect your property.
How To File For Bankruptcy
Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Whether you get that opportunity is up to the bankruptcy court. You can file for bankruptcy on your own, or you can find a bankruptcy lawyer, which most experts regard as the prudent avenue to pursue.
Bankruptcy costs include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees. If you cant afford to hire an attorney, you may have options for free legal services. If you need help finding an affordable bankruptcy lawyer or locating free legal services, check with the American Bar Association for resources and information.
Before you file, you must educate yourself on what happens when you file for bankruptcy. Its not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must follow.
The steps are:
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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.