Exceptions To Payment Rules
There are some exceptions to the payment rules. You can make direct payments for:
- secured creditors, like a mortgage lender
- debts which are not included in the bankruptcy , these are called non-provable debts
- money owed after 19 March 2012 to the Department for Work and Pensions for budgeting or crisis loans
You must keep paying rent and any new debts after the bankruptcy. You might not need to pay bills that are unpaid at the date of your bankruptcy order. You may have to pay a deposit for future supplies of gas, electricity or other utilities. Or your utility accounts may be transferred to a spouse or partner.
What Happens When You Go Bankrupt
If the adjudicator makes you bankrupt:
- youll receive a copy of the bankruptcy order and may be interviewed about your situation
- your assets can be used to pay your debts
- youll have to follow the bankruptcy restrictions
- your name and details will be published in the Individual Insolvency Register
You can apply to have your address removed from the Individual Insolvency Register if publishing it will put you at risk of violence. This will not affect your bankruptcy.
After 12 months youre usually released from your bankruptcy restrictions and debts. Assets that were part of your estate during the bankruptcy period can still be used to pay your debts.
You might be able to cancel your bankruptcy before youre discharged.
Bankruptcy only applies to individuals. Find out what your options are if your limited company cannot pay its creditors.
Chapter 7 Bankruptcy: What It Is And How To File
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Chapter 7 bankruptcy can wipe out many forms of overwhelming debt under the protection of a federal court. You may have to give up some assets, like an expensive car or jewelry, but the vast majority of filers do not. Chapter 7 bankruptcy is the fastest and most common form of bankruptcy.
Chapter 7 bankruptcy erases most unsecured debts, that is, debts without collateral, like medical bills, credit card debt and personal loans. However, some forms of debt, such as back taxes, court judgments, alimony and child support, and student loans generally arent eligible. Chapter 7 bankruptcy will leave a serious mark on your credit reports for 10 years. During this time youll likely find it harder to get credit. Even so, youll probably see your credit scores start to recover in the months after you file.
Read on to learn about how you can qualify for Chapter 7 bankruptcy, how to file, whether this debt relief option is right for you, and how to rebuild after bankruptcy.
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There Are Options When Filing For Bankruptcy
If your financial circumstances do not allow you to pay all the debt you owe, bankruptcy can be a viable option for financial recovery. Before filing for bankruptcy, you might want to consider these other options for getting your finances back on track:
- Work directly with your creditors to reach a mutually beneficial debt settlement.
- Ask creditors for payment deferments, extensions, or reductions until you can get back on your feet.
- Carefully consider consolidating your debt into one loan with a single payment.
Consolidating debt comes with its own set of risks. A lawyer in your area can help you decide if these options will help relieve your current financial situation or if bankruptcy protection is a more viable option for you.
What Happens After Filing For Bankruptcy
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
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Bankruptcy Laws In Ontario
- The Ontario Executions Act defines which assets are exempt from bankruptcy, besides those defined under the Bankruptcy and Insolvency Act.
- The Ontario Limitations Act defines the statute of limitations for debts that were sold to a collector. In most cases, the statute expires after two years. If a debt is past the statute of limitations, you may not need to file bankruptcy to deal with that debt.
- The Personal Property Security Act requires creditors to register their interest in any assets that you put up as collateral. Your bankruptcy trustee will search the PPSA database to make sure no creditors have claims to your assets before they can sell them.
Who Can Be Made Bankrupt
A bankruptcy order can be made for one of three reasons:
- you cannot pay what you owe and want to declare yourself bankrupt
- your creditors apply to make you bankrupt because you owe them £5000 or more
- an insolvency practitioner makes you bankrupt because youve broken the terms of an individual voluntary arrangement
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Myth #: Filing Bankruptcy Is Very Difficult And Could Result In An Audit
Not in most cases. Filing bankruptcy is much easier than in the past. While the law requires various forms to be filled out and submitted to the court, much of this work is done electronically thanks to electronic filing.
In most cases, we simply need an intake form completed, values for your property, bank statements for 3 months, tax returns for 2 years, paystubs for 6 months and a list of your debts. Our Firm handles the rest. We have the necessary experience and dedication to make your filing go smoothly and efficiently.
After filing, a Trustee assigned to your case may require additional financial documentation, but audits are extremely rare . In the rare instance of an audit, we have successfully assisted our clients through the audit with no problems.
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What Happens To My Credit If I Declare Bankruptcy
When you declare bankruptcy, it’s a sign that you are no longer paying your debts as originally agreed, and it can seriously damage your credit history. That said, the two types of bankruptcy aren’t treated the same way. Because chapter 7 bankruptcy completely eliminates the debts you include when you file, it can stay on your credit report for up to 10 years.
While chapter 13 bankruptcy is also not ideal from a credit standpoint, its setup is viewed more favorably because you are still paying off at least some of your debt, and it will remain on your credit report for up to seven years.
Shortly after your bankruptcy is discharged by the courtmeaning you no longer owe the debts you’ve included in your filingit may be difficult to get approved for credit, especially with favorable terms. There are some lenders, however, who specifically work with people who have gone through bankruptcy or other difficult credit events, so your options aren’t completely gone.
Also, the credit scoring models favor new information over old information. So with positive credit habits post-bankruptcy, your credit score can recover over time, even while the bankruptcy is still on your credit report.
Are Bankruptcy Filings Publicly Available
Bankruptcies are considered a public record, but that doesn’t mean everyone’s going to know about it. Bankruptcy proceedings are filed in a system called Public Access to Court Electronic Records, or PACER for short.
For the most part, it’s more common for attorneys and creditors to use this system to look up information about your bankruptcy. But anyone can register and check if they want to. The service charges 10 cents per page to access case information.
Another way people might find out about your bankruptcy is if your local newspaper publishes public notices.
Finally, employers, landlords and creditors may be able to see on your credit report that you’ve filed bankruptcy when you apply for a job, an apartment lease, or a loan or credit card.
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Should I File For Chapter 7 Bankruptcy
- Read this in:
Learn about the pros and cons of filing for bankruptcy and what types of debts you can discharge. #0103EN
What is bankruptcy?
It is a legal process to help people who are unable to pay their outstanding debts.
How are Chapter 7 and Chapter 13 bankruptcies different?
Chapter 7: the court cancels your debt. Your bills vanish. You are no longer responsible for them. You get a clean slate and a chance to start over with no debt.
Chapter 13: the court puts you on a 3- to 5-year payment plan to repay your debts. This can help you try to avoid foreclosure of your home or to pay off other debts, such as traffic tickets or legal financial obligations , that you cannot discharge.
My wages are being garnished. Can a bankruptcy help?
Probably. The day you file for bankruptcy, the court issues a stay. This means all collection action, including garnishment, must stop immediately.
Which bills can I discharge in a Chapter 7?
You can discharge most bills, including credit card debt, hospital and medical debt, debt owed to a former landlord, and debt owed due to the repossession of a vehicle.
You cannot discharge:
Traffic tickets and fines . Read My Drivers License was Suspended. Can I Get it Back? to learn more.
When should I think about Chapter 7 bankruptcy?
You can only file for bankruptcy once every 8 years. Before filing for Chapter 7, at least 1 of these should be true:
If you are a homeowner:
When do I not need bankruptcy?
Cooperating With The Trustee
Bankruptcy filers have an obligation to cooperate with the trustee throughout their bankruptcy case. Filers will need to provide the trustee with a copy of the tax return for the year the case was filed.
After the meeting of creditors the trustee will file a Report of No Distribution indicating that no funds are going to be distributed to your creditors or a Notice of Claims Bar Date stating the due date for creditors to file claims to receive funds in your bankruptcy. Other than these filings, ideally you will not hear from the trustee after the meeting of creditors.
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Here’s How Bankruptcies Impact Your Credit Score
While bankruptcies on your credit report will always get factored into your credit score for as long as they are on there, the impact on your score lessens with each year that passes. So, you may see a dramatic drop in your score in the first month immediately following your bankruptcy filing, but by the end of the first year it could have less weight, and certainly less in later years compared to year one.
Your own credit profile will also play a part in how much your credit score is affected when you declare bankruptcy. Similar to how having a higher credit score can ding your more points if you miss a credit card payment, so, too, is the case if you file for bankruptcy. According to FICO, someone with good credit may experience a bigger drop in their score when a bankruptcy appears on their report than someone with an already poor credit score.
Estimates we found online from places like Debt.org show how people with different credit scores would be impacted by a bankruptcy filing. Someone with a credit score of 780 or above would be dinged between 200 and 240 points, while someone with a 680 score would lose 130 to 150 points.
Whatever the case, no one really benefits from filing for bankruptcy. It’s an option of last resort that sometimes even those with good credit find themselves making.
You Will Be Discharged From Bankruptcy
A discharge releases you from the legal obligation to repay the debts you had as of the date you filed for bankruptcy, except for specific types of debts that are excluded by law. These include alimony and child support payments, student loans , court-ordered fines or penalties, and debts arising from fraud.
The timing of your discharge depends on a number of factors, including whether this is your first bankruptcy, and whether you are required to make surplus income payments.
Timing of your discharge from bankruptcy
If this is your first bankruptcy and you are not required to make surplus income payments , you will be eligible for an automatic discharge from bankruptcy in nine months. If your surplus income is higher, your bankruptcy will be extended to 21 months and you will be required to make payments from your surplus income.
Your discharge from bankruptcy will happen automatically if
- the discharge is not opposed by the LIT, a creditor or the Office of the Superintendent of Bankruptcy
- you have attended the mandatory financial counselling sessions and
- this is your first or second bankruptcy.
To ensure that a greater percentage of debts is repaid to creditors, the following standards set out when an automatic discharge will occur.Timing of your discharge from bankruptcy , First Bankruptcy
|Surplus income is greater than $200 per month||36 months after filing|
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Avoid Foreclosure Or Repossession
If you are facing foreclosure or repossession, bankruptcy’s automatic stay can stop the process and provide you time to negotiate with the lender or bring your account current. If you cannot cure your default in a short period, you can catch up on payments and keep your home by filing for Chapter 13 bankruptcy.
If You’re Considering Personal Bankruptcy Here Is How The Process Works
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
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.
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Keep Track Of Your Credit During The Process
Because declaring bankruptcy can affect your credit history and ability to do certain things in the future, it’s important to monitor your credit scores during the process and as you work on recovering from the ordeal.
As you do so, watch how certain actions affect your credit scores and look out for potential errors and negative information that might influence your score negatively. If you do find something that doesn’t belong on your credit report, dispute it with the credit reporting agencies.
As you keep track of your credit score during and after bankruptcy, you’ll learn better how to improve it over time and keep it in a good place going forward.
Want to instantly increase your credit score? Experian Boost helps by giving you credit for the utility and mobile phone bills you’re already paying. Until now, those payments did not positively impact your score.
This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report.
Stop A Foreclosure Repossession Or Eviction
The automatic stay will stop these actions as long as they’re still pending. Once complete, bankruptcy won’t help.
- Evictions. An eviction that’s still in the litigation process will come to a halt after a bankruptcy filing. But the stay will likely be temporary. Keep in mind that if your landlord already has an eviction judgment against you, bankruptcy won’t help in the majority of states. Learn more about evictions and the automatic stay.
- Foreclosure and repossession. Although the automatic stay will stop a foreclosure or repossession, filing for Chapter 7 won’t help you keep the property. If you can’t bring the account current, you’ll lose the house or car once the stay lifts. By contrast, Chapter 13 has a mechanism that will allow you to catch up on past payments so you can keep the asset. Find out more about bankruptcy’s automatic stay and foreclosure and car repossession and bankruptcy.
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