Approved Credit Counselors And Debtor Educators
The Department of Justices U.S. Trustee Program approves organizations to provide the credit counseling and debtor education required for anyone filing for personal bankrutpcy. Only the counselors and educators that appear on the U.S. Trustee Programs lists can advertise that they are approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.
Chapter 7 Vs Chapter 13
Chapter 7 and Chapter 13 are the two most common types of personal bankruptcy.
In a Chapter 7 bankruptcy, a trustee appointed by the bankruptcy court will liquidate many of your assets and use the proceeds to pay your creditors some portion of what you owe them. Certain assets are exempt from liquidation. Those typically include part of the equity in your home and automobile, clothing, any tools you need for your work, pensions, and Social Security benefits.
Your nonexempt assets that can be sold off by the trustee include property , a second car or truck, recreational vehicles, boats, collections or other valuable items, and bank and investment accounts.
In Chapter 7, your debts are typically discharged about four months after you file your bankruptcy petition, according to the Administrative Office of the U.S. Courts.
In a Chapter 13 bankruptcy, by contrast, you commit to repaying an agreed-upon portion of your debts over a period of three to five years. As long as you meet the terms of the agreement, you are allowed to keep your otherwise-nonexempt assets. At the end of the period, your remaining debts are discharged.
In general, people with fewer financial resources choose Chapter 7. In fact, to be eligible for Chapter 7, you must submit to a means test, proving that you would be unable to repay your debts. Otherwise, the court may determine that Chapter 13 is your only option.
Different Types Of Bankruptcy
Bankruptcy is a formal process that gives a business the opportunity to reorganize and pause payments on debts while doing so or before going out of business. There are several different types of business bankruptcy:
- Administration A company can try to preserve its business venture by choosing administration rather than liquidation bankruptcy. During administration, an appointed administrator decides how to turn the business around in order to pay its debts and avoid insolvency. The administrator may determine to sell the company or explore funding options that can keep the company operating.
- Chapter 7 bankruptcy Under Chapter 7 bankruptcy, a business determines that its debts are so overwhelming that there is no option other than to close the business. A court-appointed trustee becomes responsible for selling company assets, the proceeds of which are used to pay off the companys debts.
- Chapter 11 bankruptcy Under Chapter 11 bankruptcy, a company can reorganize and create a plan to repay creditors over time. Creditors get an opportunity to vote on that plan. The company can continue to operate, but financial decisions must be approved by a bankruptcy court.
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Chapters 11 And 1: Process
Once your local jurisdiction receives your official petition, you can then file your reorganization plan. In addition to your repayment strategy, your plan must include details about your businesss liabilities, assets, and current partnerships . Its relatively similar to the lengthy business plans required for traditional business loans.
If your creditors approve your reorganization plan, a date for a confirmation hearing will be set. Its here where the bankruptcy court will either accept or reject your proposed plan. If approved, you can continue running your business and put your reorganization plan into action. From the moment your plan is approved until all debts are paid off, the bankruptcy court must approve virtually all business decisions.
You will also probably have to send financial statements to the court periodically. This will prove that you follow the strategies laid out in your plan and are on track to achieving your repayment goals.
What Types Of Bankruptcy Should I Look For
Individuals and businesses can file for several different types of bankruptcy depending on the reasons for filing.
Some of the common types of bankruptcy include:
Regardless of the type of bankruptcy that was filed, it can be searched the same way. The easiest way is using the online PACER system to access bankruptcy documents. You do not need to know which chapter the bankruptcy was filed under to search online for the record.
If you know the name of the individual or the name of the business, you can begin the search for bankruptcy documents. Chapter 7 bankruptcy is the most common type of claim for individuals. If your search reveals that the person you are looking into filed for Chapter 7 bankruptcy, you will know that their debts were likely more of a personal nature than business related.
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About Licensed Insolvency Trustees
In a bankruptcy, people or companies who can no longer pay their debts give all of their non-exempt property to a Licensed Insolvency Trustee who then sells it and distributes the money to creditors. Bankruptcy can be voluntary or forced by a creditor through the Courts.
Roughly 90 percent of bankruptcies in Canada are consumer bankruptcies where the business-related debts make up less than 50 percent of the bankrupt’s total debts.
When the bankrupt’s realizable assets do not exceed $15,000, the bankruptcy may be processed under summary administration. Almost all consumer bankruptcies are processed this way.
Bankruptcies processed as summary administrations are simpler for example, they don’t require a meeting of creditors. If your debtor’s bankruptcy is to be handled as a summary administration, you will find a notation saying so near the top of the documents you receive.
As soon as the debtor is declared bankrupt, creditors can no longer start or continue legal proceedings against the debtor without the Court’s permission.
If you are a secured creditor, however, you can take possession of the asset on which you hold a security unless the Court, under certain conditions, orders otherwise. For example, a bank holding a security on a car may take possession of the car and sell it even if the debtor has declared bankruptcy.
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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Can I Keep My Car
If you can continue to make payments on the car, its very likely you will be able to keep it. If you cant keep up with payments, then it depends on how much you owe what the car is worth and how much your state allows you to exempt. The amount varies from state to state and could be as low as $500. If your equity is higher than the exemption, the vehicle could be sold and youll receive the exempt portion. That is rare.
If youre behind on payments, there may be options that would allow you to keep your car. If these options work for you, great! If not, you may end up having the car repossessed by your lender.
Do your best to keep your car because buying a car after bankruptcy and getting a good deal on it is a tough task. Qualifying for a car loan will be the first hurdle. Once youve cleared that, finding a decent rate will be tough to come by.
Filing Under The Same Bankruptcy Chapter: Chapter 7 And Chapter 13
Here are the timeframes if you plan to file the same bankruptcy chapter that you filed the first time:
Successive Chapter 7 cases
- You’ll have to wait eight years after the first Chapter 7 case filing date before filing the second case.
Successive Chapter 13 cases
- Two years must elapse between filing dates before you’ll be entitled to receive a second Chapter 13 discharge.
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Accounts Included In Bankruptcy
When you include an account in your bankruptcy filing, the lender will update the account to show the status as “included in bankruptcy.” Once the bankruptcy is discharged, the status will be updated again to show that it has now been “discharged” in bankruptcy.
Whether you file Chapter 7 or Chapter 13, an account that was never late and then included in bankruptcy will be removed seven years from the bankruptcy filing date. If the account was delinquent at the time it was included in the bankruptcy, it will be removed seven years from the original delinquency date on the account. In both cases, accounts included in bankruptcy will continue to show the payment history on the account prior to the bankruptcy status.
How To Research Bankruptcy Filings
Generally, bankruptcy filings are public record, available to anyone who wishes to review them. You can access the case documents online through PACER, an electronic public access service of United States federal court documents. Alternatively, you can search the bankruptcy records in person at the relevant bankruptcy court clerk’s office. Bankruptcy filings consist of all the documents that are filed in a particular case. Some important motions for which you should watch are motions to dismiss the case or motions to convert to another type of bankruptcy proceeding. These motions reflect a possible failure on the part of the debtor to follow bankruptcy rules and may affect your rights if the debtor owes you money.
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Bankruptcy Information For Consumers
Bankruptcy is a federal legal process through which individuals or businesses who are in debt may seek to eliminate the debt, repay some or all of it, or liquidate their assets to obtain relief from their financial troubles and start over.
It is important that consumer creditors be aware of deadlines related to a Bankruptcy filing. You may call the Bankruptcy Court where the business filed to obtain more information and specifics about a claim as a consumer creditor. There are three offices of the United States Bankruptcy Court for the District of Massachusetts that are located in Boston, Worcester and Springfield. The contact numbers for each are as follows:
Boston 748-5300
Springfield 785-6900
Your Responsibilities Don’t End When You Receive A Discharge
Just because you received a discharge doesn’t mean that you have no more responsibilities in your bankruptcy. If you have a complex bankruptcy with ongoing lawsuits or appeals, your case might remain open for a long time after the court grants your discharge.
In addition, if you have nonexempt property that the trustee has not abandoned, it will remain property of the bankruptcy estate. The court will not close your case until the trustee files a report stating that he or she has administered all property of the estate.
Until the court closes your case, you have a duty to cooperate with the trustee. This means that you may still be required to:
- turn over nonexempt assets to the trustee
- provide additional information or documentation
- testify in a pending lawsuit, or
- appear at a deposition or 2004 examination.
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Protect Your Business From Customer Bankruptcy With Trade Credit Insurance
When a customer declares bankruptcy and later becomes insolvent, collecting on past-due invoices becomes next to impossible. Euler Hermes can help keep your cash flow positive with Trade Credit Insurance. Trade Credit Insurance protects your accounts receivables against loss and guarantees compensation even in the event of non-payment. Learn more about Euler Hermes and get a free trade credit insurance quote.
How To Review Bankruptcy Filings
Whether you are reviewing bankruptcy filings electronically or in person at the courthouse, you review the records in the same way. Each bankruptcy case has what is known as a docket. A docket is an index of all the documents filed in a particular case. This allows you to quickly review all filings in a bankruptcy case and choose which specific documents you need. For example, if you are looking for the schedule of property filed by a debtor, visually search for the word “schedule” in the docket. If you are looking for a motion to dismiss, visually scan the docket for the word “dismiss.” If you are reviewing the docket on a computer, you can use the computer’s search function to quickly find these words. You can download a document from PACER, or if you are searching in person, you can request the particular document from the clerk.
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If You’re Considering Personal Bankruptcy Here Is How The Process Works
If your debts have become unmanageable or you’re facing foreclosure on your home, you might be thinking about declaring bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before you make any decisions. For example, bankruptcy will remain on your credit report for either seven or 10 years, depending on the type of bankruptcy. That can make it difficult to obtain a credit card, car loan, or mortgage in the future. It could also mean higher insurance rates and even affect your ability to get a job or rent an apartment. This article explains how bankruptcy works and also offers some alternatives to bankruptcy.
How Long Will It Take For My Credit Score To Rebound
The exact numbers vary, but it really depends on your starting point. A good credit score will likely drop more than 200 points. A lower score will drop between 130 and 150 points. Just about everybody who files for bankruptcy ends up with a credit score somewhere south of 600, some of them way south.
This can mean paying much higher interest rates on loans, assuming youd even qualify for them.
A Chapter 7 bankruptcy stays on your credit report for 10 years. A Chapter 13 stays on for seven years, but you can rebuild your credit over time by managing your debt smartly.
The best place to start is by making on-time payments and bringing past due accounts up to date. That is the biggest factor in your credit score.
The impact of bankruptcy lessens over time because some of your debt is reduced or discharged. That reduces your credit utilization ratio, which determines 30% of your credit score. FICO estimates it takes about five years for a score that was 680 to fully recover from a bankruptcy filing.
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Will My Employer Find Out
Not necessarily. The most likely way would be if a creditor has sued you and is garnishing your wages. If the garnishment stops due to bankruptcy proceedings, your employer has to be notified since it cuts your checks.
But if your wages are being garnished, your employer already knows youre under financial stress and might be relieved you have filed for bankruptcy to start digging yourself out.
With Chapter 13, the court could order that payments be automatically deducted from your wages and sent to creditors. But the bankruptcy code has rules that prohibit employers from discriminating against employees based solely on bankruptcy filings.
Other Types Of Bankruptcy
Chapter 7 and Chapter 13 are your two choices when filing for personal bankruptcy. But there are a few other types of bankruptcy you might hear about in passing as you explore your options.
Chapter 9
Chapter 9 applies to municipalities — cities, states, and other public entities like school districts are eligible for it when they can no longer keep up with their financial obligations. Chapter 9 debtors reorganize their debts in an attempt to pay creditors to the greatest extent possible, and the extent to which creditors are made whole depends on the level of assets and revenue the filer in question has.
Chapter 11
Chapter 11 is a corporate bankruptcy that allows companies to reorganize their debts, similar to a Chapter 13. Under Chapter 11, a company puts together a plan of reorganization that dictates how its existing debts will be paid. The purpose of Chapter 11 is to allow the company in question to keep operating. By contrast, Chapter 7 liquidations are available to corporations, too, only in that case, the filing company doesn’t attempt to stay in operation, but rather, winds down its business and pays creditors off to the greatest extent possible.
Chapter 12
Chapter 12 is an option specifically for farmers and fishermen to reorganize their debts. It works much like a Chapter 13 bankruptcy, only to be eligible, you must be engaged in a commercial farming or fishing operation.
Chapter 15
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