How Do You File A No
The filing procedures are the same for all Chapter 7 bankruptcy cases. Whether your case is an asset or no-asset case will depend on whether your paperwork shows that you have property that you can’t protect with a bankruptcy exemption . Here’s the procedure.
- File the bankruptcy petition. You file a packet of papers called the Chapter 7 bankruptcy petition. As with all Chapter 7 cases, you must qualify for Chapter 7 relief. You must pass the means test and take a credit counseling course.
- The automatic stay. When you file your petition, the automatic stay goes into effect. The stay prevents most creditors from continuing any collection activities during your bankruptcy case.
- The creditor’s meeting. As in all Chapter 7 bankruptcy cases, you must attend the meeting of creditors . At the meeting, the trustee will ask you a series of questions about your debts and property. Creditors usually don’t attend. Most meetings last less than 10 minutes.
- Chapter 7 discharge. At the end of your bankruptcy case, most of your debts will be discharged . There are a few exceptions.
Whats The Process Of Filing Bankruptcy
Filing a Chapter 7 bankruptcy is more straightforward than Chapter 13, and it can take four to six months to complete the whole process. Youll go through mandatory credit counseling and budget counseling, attend a creditors meeting, and wait for the courts written discharge of your debts.
Lets dive into a few questions that you probably have about your house:
What Do I Do Now
If you are experiencing money problems, we recommend that you call a licensed trustee in bankruptcy to arrange for a personal consultation.
As you can see the rules are complicated, and they can change, so it is crucial that you discuss your property with your Ontario bankruptcy trustee before filing for bankruptcy in Ontario. You should be completely clear on what you can keep if you go bankrupt in Ontario and which property you may lose if you go bankrupt in Ontario.
Will I Lose My Assets If I File For Chapter 7
You may possibly lose some assets if you file for Chapter 7. In Florida, we have a very extensive homestead exemption, it’s unlimited, so your home is protected. However, in exchange, they very much limited the personal property in vehicle exemptions. If you do own a home, your personal property exemption is limited to $1000 per person, and your vehicle exemption is also limited to $1000 per person. If you have valuable assets you may want consider filing a chapter 13 instead, where all of your assets are protected and you get the opportunity to repay some of the debt to your creditors.
Bankruptcy is a tradeoff. In exchange for the court reducing or eliminating your debt, you agree to release some of your assets to repay the creditors. Those assets are examined under Florida law to see what you are allowed to keep and what you must relinquish. The overall goal being that the trustee, or the court-appointed manager of your case, will try to recoup as many of your assets as possible and use those assets to pay the creditors. Here are the basics regarding assets in a Chapter 7 bankruptcy:
Some other personal property is exempt and not counted against the $1,000 such as education and health savings accounts and prescription health aids, plus pension benefits, qualified tax exempt retirement accounts, or public benefits like Workers Compensation or Social Security.
What Happens To Your Spouses Credit Or Assets
If your debts are your own, your spouse is not affected by your bankruptcy. Your bankruptcy does not appear on their credit report.
If you have joint debt, your creditor will pursue your spouse for collection. In this case, you may want to talk to your trustee about a joint bankruptcy.
Only your share of any assets you own is included in your bankruptcy. If you own any assets jointly, such as a marital home, it is essential to discuss options with your trustee. Again, a consumer proposal may be a more viable alternative in this scenario.
If your spouse, or anyone, co-signed a loan for you, they are still liable for repayment of any debts forgiven to you in your bankruptcy.
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What Do You Have To Do During Your Bankruptcy
As your bankruptcy proceeds, you have a list of obligations as a bankrupt known as bankruptcy duties.
Out of these tasks, the most common include:
- Sending your trustee proof of your income every month
- Paying your trustee if you have surplus income
- Completing two credit counselling sessions
- Going to a creditor meeting or attending bankruptcy court
If you do not fulfill your duties as described, then there are serious consequences. Your trustee has the option to oppose your bankruptcy discharge and apply for a hearing in court. Failing to complete your duties means your debts will not be eliminated.
Choose The Right Bankruptcy Filing For You
We are proud to represent our clients in four primary areas of bankruptcy relief. Called Chapters, each of these forms of bankruptcy has its own advantages and disadvantages. The four Chapters used for filing for bankruptcy, where we help clients find debt relief, include:
- Chapter 7: Straight bankruptcy, where debts are fully forgiven
- Chapter 11: Complex business bankruptcies with debt reorganizations and restructures
- Chapter 12: Debt relief and repayment plans for family farmers and family fishermen
- Chapter 13: Debt relief for income earners that can help stop foreclosures and other looming debt recovery efforts
When you decide to declare bankruptcy, your lawyer will help you choose the right Bankruptcy Chapter for your financial situation. Filing for bankruptcy is a complex, time-consuming procedure. Your lawyer can help you understand and navigate the filing process from your initial petition to final discharge.
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Start Saving Money And Build A Budget
After going through bankruptcy, the last thing you want is for history to repeat itself. To help ensure this does not happen, establish good financial habits including starting a savings account that you can access during financial emergencies and creating a budget that you use to manage your income and expenses and guide your day-to-day spending. These steps can help prevent your spending from getting out of control and reduce the chances of accumulating significant debt again.
Knowing how to manage your money is an integral part of the rebuilding process, says Tayne. Prevention is the best medicine, and saving money, along with budgeting, creates healthy financial habits for your present and future.
One of the most effective ways to save money is to make doing so a habit. You can accomplish this by setting up recurring, automatic transfers to a savings account.
With every check or payment you receive, no matter the amount, deposit a certain percentage into a savings account of some type, says Sean Fox, president of Freedom Debt Relief. You should aim to save about 10 percent or more per paycheck, but select an amount that will allow you to comfortably and consistently keep making savings deposits.
Does Bankruptcy Take Care Of Any Tax Money I Owe To The Canadian Revenue Agency
Many people assume that income tax debt is not dischargeable in bankruptcy. However, in a bankruptcy, your debt to the CRA is treated the same as any other unsecured debt, such as credit cards or lines of credit. After filing for bankruptcy, all interest and collection activity by the CRA will stop. Additionally, your trustee will communicate directly with the CRA on your behalf.
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What Happens After A Year
When you’re discharged from bankruptcy – usually after a year – you’re freed from any debts that were included in your bankruptcy. The worst is over.
Although you’re now debt-free there are some, like student loans, which you still have to pay.
If your home has been taken from you but hasn’t been sold or an alternative agreement worked out after three years, it might be given back to you.
You Cant File Chapter 7 If You Make Too Much Money
If youâre making less than the median income, youâre probably wondering how thatâs even possible. Donât fret; this is not about you. This is about folks who have money they can put into savings after paying their main living expenses.Â;
Thatâs called having disposable income and itâs calculated by the means test. Having too much disposable income means youâre not eligible to simply walk away from your debt. But, while you canât file Chapter 7, you can still get a bankruptcy discharge after completing a Chapter 13 repayment plan.Â;
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Can A Bankruptcy Trustee Take My Home
Itâs not common, but itâs possible in certain circumstances.Â;
The bankruptcy trusteeâs job is to sell non-exempt property for the benefit of unsecured creditors. That includes personal property and real property. Whether your home is safe from the trustee depends on whether it has any ânonexempt equityâ which in turn depends on its market value.
As a reminder, hereâs how we calculate equity in this scenario:Â;
Maintain Your Job And Home
Maintaining your job and home is an essential part of life after bankruptcy and rebuilding your financial profile and reliability. You want to show lenders that you can pay back debts such as your mortgage and that you can maintain a reliable, steady stream of income through a job.
In addition, many lenders consider your employment history when reviewing applications. Having a consistent income improves your chances of being approved for future loans. Job hopping or gaps in employment on the other hand, can make you look like a risk.
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How Long Will You Be Bankrupt
The;length of bankruptcy;depends on two factors: if youve declared bankruptcy before and your income level.
If you are a first-time bankrupt with no surplus income, have completed all your duties, and if no creditors object, you could begin your life debt free in just 9 months.
If you have surplus income, your bankruptcy will be extended to 21 months.
Those claiming bankruptcy a second and third time will be bankrupt longer.
As part of the bankruptcy process, you will need to attend two credit counselling sessions that will help you learn to manage your money and rebuild credit. At Hoyes, Michalos, we offer a free for clients only website to help support you through this learning.
Why Does Filing An Asset Or No
Whether you file an asset or a no-asset case is important to you, but it’s also important to your creditors. In a no-asset case, you don’t lose any property and your creditors get nothing. By contrast, in an asset case, not only do you have to give up property, but your creditors stand to get paid if they follow the correct procedures.
Here’s how it works.
The court alerts creditors that you’ve filed for bankruptcy by sending out a notice. The notice includes the bankruptcy case number, the name of the trustee, and states whether it’s an asset or a no-asset case.
If it’s an asset case, the notice will include the date by which a creditor must complete a proof of claim form to receive a portion of available funds. If a case is initially filed as a no-asset case, but the bankruptcy trustee finds assets later, the trustee will send out a new notice with a proof of claim filing date.
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Can I Keep My House If I File Chapter 13
If you have sufficient income to keep up with your mortgage, you will not lose your house. Chapter 13 bankruptcy involves a 3 – 5 year repayment plan. Long-term secured debts, like home mortgages, remain in place. Just like after a Chapter 7 filing, youâll continue to make your regular monthly mortgage payments after filing. In other wordsâ¦
If youâre current with your mortgage payments â¡ï¸ everything will stay basically the same.Â;
What Are The Negatives
Aside from what’s we’ve already mentioned, like your possessions being taken from you, being bankrupt puts a number of restrictions on you – like not being able to borrow more than Â£500 without telling the lender about your bankruptcy.
The fact that you’ve been declared bankrupt will also stay on your credit reference file – affecting your credit rating – for six years.
If you work in certain professions like the legal or financial industry, it’s also possible you’ll lose your job. And if you own a business, it might be sold off to cover your debts.
Your bankruptcy will also be published publicly on an insolvency register for 12 months, although there can be exemptions for people who are at risk of violence.
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Northwest Territories Bankruptcy Exemptions
In the Northwest Territories, property exempt from seizure in bankruptcy is set out in the Exemptions Act and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have household furniture and equipment in your home worth $5,000 and you do not owe any outstanding loans on these items, the equity you have is $5,000. In the Northwest Territories, the exemption for the total of these items is $5,000. In this case, you would be entitled to keep these possessions and your creditors cannot take them from you.
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Debt Relief Alternatives To Bankruptcy
Bankruptcy has serious consequences. A Chapter 7 bankruptcy will remain on your for 10 years, and a Chapter 13 will remain for seven years. That can make it more expensive or even impossible to borrow money in the future, such as for a mortgage or car loan, or to obtain a credit card. It can also affect your insurance rates.
So itâs worth exploring other types of debt relief before filing for bankruptcy. Debt relief typically involves negotiating with your creditors to make your debts more manageable, such as reducing the interest rates, canceling some portion of the debt, or giving you longer to repay. Debt relief often works to the creditorâs advantage, too, as they are likely to get more money out of the arrangement than if you were to declare bankruptcy.
You can negotiate on your own or hire a reputable debt relief company to help you. As with , there are scam artists who pose as debt relief experts, so be sure to check out any company that youâre considering. Investopedia publishes a regularly updated list of the best debt relief companies.
Advantages And Disadvantages Of Filing For Bankruptcy
Many who qualify for bankruptcy never avail themselves of its potential benefits. While it is true that a bankruptcy filing can affect a persons finances for years to come, for many people, filing is the best option. However, every persons financial circumstances are unique to his or her situation. Deciding if, when and how to file for bankruptcy is a very complicated process and the consequences of filing when you shouldnt can be considerable. It is important to consult with a skilled bankruptcy attorney to determine whether bankruptcy is your best option. We invite you to contact us at Arnold & Smith, PLLC to arrange a free consultation with one of our experienced attorneys to discuss your particular situation and how a bankruptcy could impact your financial situation.
Advantages of filing for bankruptcy include:
The potential disadvantages of bankruptcy include:
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Home Equity Exemptions By State
If you want to keep your home in a bankruptcy, first look at your states laws to see how much equity you can exempt. ;
The amount of equity you have in your home is the difference between the current market value of your house and how much you have outstanding in loans or liens. So if your houses market value is $200,000, and you have $100,000 left on your mortgage, you have $100,000 of equity in your home.;
Thats where your states homestead exemption laws come into play. If you have $100,000 of equity in your home, and you live in Wisconsin, where the homestead exemption is;$75,000, that would leave $25,000 of unprotected equity. In that case, your home would likely be sold to repay some of your debts in a Chapter 7 bankruptcy. But if you had $15,000 worth of equity in your Wisconsin home, then all of your equity would be exempt and your house wouldnt be sold.;
Its not common, but some states, including Florida and Texas, allow you to exempt all of the equity in your home if your property is under a certain acreage. Most states, though, have a cap. Meanwhile, a few states, such as Pennsylvania and New Jersey, dont allow home equity exemptions at all. You do have the option of choosing the federal bankruptcy exemptions instead. The federal homestead exemption is;$25,150.