When Should You File For Bankruptcy
Filing for personal bankruptcy literally destroys your credit score and makes it hard for you to borrow again. That is why theres some stigma attached to it. It usually takes from 7 to 10 years for the bankruptcy records to be removed from your credit report. Although most loan applications will ask if you have ever filed for bankruptcy. Answering in the negative when you have filed is a fraud, and you may be liable for prosecution.
Bankruptcy is an extreme measure and should be considered only as a last resort. Its better to find a way to pay your debts than to file for bankruptcy.
A bankruptcy can affect you emotionally and ruin your personal life. Therefore, before initiating the bankruptcy process, you have to weigh all alternative options and consider the following carefully:
Which Type Of Personal Bankruptcy Is Right For Me
When bills start piling up and theres no hope of paying them off, filing for bankruptcy in Ohio can give you a clean slate. Bankruptcy provides the opportunity to wipe out your debts, but the type you choose will determine whether you can keep your assets.
Here is a basic overview of the two most common types of personal bankruptcy. Before you file the initial paperwork, consult an experienced bankruptcy attorney to discuss your options.
Chapter 7 Personal Bankruptcy
Chapter 7 bankruptcy is a great option for people who dont have many assets and qualify for this type of debt. This type of bankruptcy is especially helpful for people whose debts total over 40% of their income and have debt that can be forgiven by Chapter 7 bankruptcy. To be eligible to file Chapter 7 bankruptcy a person must pass the means test in their state. The means test is a way of seeing if your income is less than the median income for a family of your size in the state in which you are filing bankruptcy. In addition to the means test, you are required to complete a credit counseling course through an accredited credit counseling agency. If you do not pass the means test, you will need to file for Chapter 13 personal bankruptcy in Naples.
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When Should You File Personal Bankruptcy
In this day and age, many Americans are in debt. But at what point does this debt tip the scales and start negatively impacting our lives? A good way to find this out is by asking yourself the following questions provided by Legalzoom.com:
- Do you only make minimum payments on your credit cards?
- Are bill collectors calling you?
- Does the thought of sorting out your finances make you feel scared or out of control?
- Do you use credit cards to pay for necessities?
- Are you considering debt consolidation?
- Are you unsure how much you actually owe?
According to the article, if you answer yes to two or more of the above questions its time to take a closer look at your financial situation. You can either do this yourself or contact a financial consultant and/or a personal bankruptcy attorney in Naples. To clarify your financial status, add up all your liquid assets and the debt you owe, along with current bills. If your assets are less then your debt, you may want to consider filing personal bankruptcy. However, some debt cannot be discharged through debt, like student loans for instance. If most of your debt is in the form of student loans, child support, alimony, etc. you may need to consider alternate debt relief solutions. If your debt can be discharged by personal bankruptcy, and you dont see any other viable debt relief strategy, youll want to decide on filing either Chapter 7 or Chapter 13 bankruptcy.
Small Business Bankruptcy In Canada
If a small business is set up as a partnership or sole proprietorship and it ends up insolvent it will be treated like a personal bankruptcy.
The reason for this is that a sole proprietorship or partnership is legally the same as the individual that runs the business.
The assets of the business are not separate from the owners personal assets.
However, when a business is incorporated the business bankruptcy process will be quite different, and can become quite challenging.
An incorporated business and its assets and liabilities are their own legal entity and are separate from the business owner.
If your business is incorporated or a sole proprietorship / partnership we can help you find the trustee for filing bankruptcy who has extensive experience handling business bankruptcies in Canada.
What Is Bankruptcy Protection
Bankruptcy protection is an American term, but generally speaking, it refers to when a company declares that its insolvent and needs time to get its finances reorganized. During this time, the company needs protection from its creditors so that it can work out its difficulties and come up with a plan to get back on track.
Your Legal Help For Filing Chapter 7 Bankruptcy In Wisconsin: Bankruptcy Law Offices Of Richard A Check Sc
Chapter 7 of the Title 11 of the United States Code is one of the most common ways of filing bankruptcy. It is also known as straight bankruptcy or liquidation . A successful Chapter 7 filing in Wisconsin will wipe out most of your unsecured debts and allow you to keep most of your property with voluntary reaffirmation of your secured debts . Filing Chapter 7 Bankruptcy in Wisconsin will also stop your utility disconnection, wage garnishment, and small claims actions as well as prevent creditors from harassing you by phone and mail.
The global economic crisis has affected nearly every home. Finding yourself in a situation of financial distress is more common today than it was yesterday. You may have been evicted from your apartment, had your utilities cut off or faced endless harassmentâs by creditors about repossessing your property. You may have encountered such life-changing situations as death of a spouse, loss of job or unexpected serious illness, which has severely affected your financial position. Living with a heavy burden of debt can be highly stressful. Although it might be difficult to admit, there are times when filing personal Bankruptcy is your best option.
What Are The Two Types Of Personal Bankruptcy
Hard financial times can fall upon just about anyone in West Virginia. A job loss due to a serious illness or a downturn in the economy can easily lead to financial catastrophe, especially when your savings account and unemployment benefits run dry. In such situations, filing for bankruptcy can be a good way to deal with unmanageable debt and move forward on fresh financial footing. There are two types of personal bankruptcy a person can pursue: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
What Happens When I File A Chapter 13 Case
In a Chapter 13 case, you do not have to liquidate assets in order to pay your creditors instead, you develop a plan to repay all or a portion of your debts over time, which allows you to keep most or all of your property. During the period the plan is in effect, you make your regular payments to the trustee assigned to your case who, in turn, distributes the money to your creditors. The applicable commitment period for payment under a Chapter 13 plan is three years for debtors whose family’s current monthly income is less than the state median for a family of the same size and five years if it is greater. Your Chapter 13 plan must pay your unsecured creditors at least as much as they would receive if your nonexempt assets were liquidated under Chapter 7. Also, your plan payments for unsecured debts must be equal to your disposable income . In other words, you cannot retain a cash reserve each month.
In order to be eligible to file for Chapter 13 bankruptcy, you must have regular income and meet certain debt limitations for your unsecured and secured debts . Individuals, sole proprietorship businesses, or spouses can file a Chapter 13 Bankruptcy. Just like a Chapter 7 case, filing a petition for Chapter 13 bankruptcy with the bankruptcy court automatically stays most debt collection actions against you. You must file your repayment plan either with your petition or within 14 days after filing your case.
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What Court Handles Bankruptcy
Bankruptcies handle in the federal courts, and the rules are outlined in the US Bankruptcy Code. These rules are affected by the state where the Bankruptcy is filed and the rulings of the bankruptcy courts and appellate courts in their district. Not every ruling for one bankruptcy court automatically apply for other ones. So different states and federal courts can rule on the same set of facts differently when interpreting the law based on precedent in that court.
Even though New York and New Jersey are next-door neighbors, they are in different federal districts and have many laws related to bankruptcy that are handled differently.
As an example, New Jersey tax liens are a common issue for bankruptcies in New Jersey. And, knowing how to handle them in a New York bankruptcy can become a sticking point if your bankruptcy attorney does not understand the law of both states.
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Three Types Of Bankruptcy
There are three types of bankruptcy, personal, small business and corporate. But despite being designated as their own type, personal and small business bankruptcies are essentially the same thing. Note that this is only true if the small business is set up as partnership or sole proprietorship, not if it is incorporated.
Before you can declare any type of bankruptcy in Canada, you need to work with a Licensed Insolvency Trustee, who will assess your financial situation and recommend which type of bankruptcy you may qualify for.
There are some basic, general qualifiers that set the parameters for whether or not youll be able to declare bankruptcy, including:
- You must be a Canadian resident
- You must owe more than $1000 to creditors
- Your debts are greater than the value of your assets and/or you are not be able to pay your bills when they are due
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How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities a schedule of current income and expenditures a statement of financial affairs and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling evidence of payment from employers, if any, received 60 days before filing a statement of monthly net income and any anticipated increase in income or expenses after filing and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
What Does Bankruptcy Cost
In a straightforward bankruptcy, the government regulates trustee fees, filing fees, and counselling fees.
In the simplest cases this amounts to $1,800.
Many trustees have payment plans that allow you to pay the costs over the nine months of the bankruptcy.
Our Bankruptcy Calculator will tell you the exact cost of your bankruptcy and how long you will be in bankruptcy.
The other administration fees are taken from excess income payments.
If there is no excess income, the bankrupt will usually make these payments monthly so that they are paid in full before the nine month discharge date.
How Excess Income Payments are Calculated
The trustee calculates the amount that the bankrupt person must pay into the bankruptcy estate each month while in bankruptcy, based on the Superintendent of Bankruptcys standards.
Lets look at an example.
Mike is a single person with a monthly take home pay of $2,462 .
Because he is in bankruptcy, he does not have to make payments on any debt.
The Superintendents standards say that Mike needs $2062 to live on.
This leaves an excess of $400.
Fifty percent percent of the excess must be paid into the bankruptcy estate monthly.
This amount is known as the surplus income payment.
The excess income calculations are adjusted for things such as:
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What Are The Different Types Of Personal Bankruptcy
Personal bankruptcy is a final option for individuals who cannot pay their debts. Through bankruptcy, they are given a chance to make a fresh start. Although declaring bankruptcy is a stressful procedure, it is an option for those who have debt growing at a rate faster than they are able to pay it off. There are two types of personal bankruptcy, Chapter 7 and Chapter 13.
Chapter 7 bankruptcy requires the debtor to gather up and claim all of their assets. Assets include homes, cars, and boats, as well as valuable household items, personal possessions, and savings accounts and investments. States have different guidelines about what exemptions a person can keep. Any investments or similar assets are liquidated, and then all assets are handed over to the court. From there, the property is sold. Any money received from the sale is used by the courts to pay the back debt of the individual filing for personal bankruptcy. Any debts not paid are released, and the debtor starts fresh, with no debt.
The United States is not the only country that offers the option of personal bankruptcy to individuals who are unable to repay their debts. Canada has a system very similar to the US’s. In Europe, debtors face much stricter penalties and restrictions when filing for bankruptcy.
How Bankruptcy Works For Creditors
Bankruptcy starts when you file completed bankruptcy forms with the bankruptcy clerk. In your bankruptcy filing, you’ll explain everything about your financial situation, which in turn will reveal why you’re bankrupt.
For instance, some of the things you’ll tell the bankruptcy court will include:
- how much you make
- who you owe money and how much
- all of the property you own
- if you’ve sold or given away property
- where you bank
- if anyone has filed a lawsuit against you.
The task of reading your bankruptcy paperwork will fall on the bankruptcy trustee the bankruptcy court appoints to oversee your case. If the bankruptcy trustee finds that you can pay some amount to your bankruptcy creditors, the bankruptcy trustee will follow the bankruptcy law to ensure each bankruptcy creditor gets the amount the creditor is entitled to receive.
How the bankruptcy trustee will pay creditors will depend on which one of three types of bankruptcy you file.
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Chapter 7 Bankruptcy Liquidation
The title of Chapter 7 is Liquidation, which is why a Chapter 7 bankruptcy is called liquidation bankruptcy. Assets are liquidated, or sold off, to recoup funds for creditors.
With this first type of bankruptcy, you sell off almost everything that you own, take that money, and pay what you can before you walk away debt-free. Chapter 7 bankruptcy is a way to hit the reset button and start over.
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What If I Have Canadian Debt But Am Living In Another Country
Canadians living abroad can go into bankruptcy for their Canadian debt in the following ways:
* They can go bankrupt in their new country of residence.
This will free them of the Canadian debt for as long as they live in that country.
If they return to Canada, that debt will have survived and they will still owe money
* They can re-establish residency in Canada and then go bankrupt in Canada
* They can go bankrupt under Canadian law while still living in their new country of residence if they have property in Canada or they have carried on business in Canada in the preceding year.
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The Bankruptcy Filing Process
There are a number of legally required steps involved in filing for bankruptcy. Failing to complete them can result in the dismissal of your case.
Before filing for bankruptcy, individuals are required to complete a credit counseling session and obtain a certificate to file with their bankruptcy petition. The counselor should review your personal situation, offer advice on budgeting and debt management, and discuss alternatives to bankruptcy. You can find the names of government-approved credit counseling agencies in your area by calling the federal bankruptcy court closest to you or by visiting its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial statements showing your income, debts, and assets. You will also be required to submit a means test form, which determines whether your income is low enough for you to qualify for Chapter 7. If it isnt, you will have to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is sometimes waived if you can prove you cant afford it.
You can obtain the forms you need from the bankruptcy court. If you engage the services of a bankruptcy lawyer, which is usually a good idea, they should also be able to provide them.
Assuming the court decides in your favor, your debts will be discharged, in the case of Chapter 7. In Chapter 13, a repayment plan will be approved. Having debt discharged means that the creditor can no longer attempt to collect it from you.