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What Does Filing For Bankruptcy Do

Understand What Bankruptcy Means

“What you Should Know Before Filing For Bankruptcy”

Unexpected or lengthy illnesses, sudden or prolonged unemployment, and many other factors beyond your control can plunge you into debt that you might struggle to recover from. Insurmountable debt can make it impossible to meet your daily needs and can also lead to persistent pressure and anxiety.

When that happens, you can file for one of many chapters of bankruptcy, which will allow you to greatly decrease or completely dismiss overwhelming debt. Bankruptcy protection is a federal process and cannot be filed or tried in a state court. Federal bankruptcy laws will allow you to begin the credit and finance journey over with a new start.

In addition to removing debt for consumers and businesses, bankruptcy also provides some measure of protection for creditors who might still recover a portion of the debt they are owed through restructured or reorganized debt payments. Your lawyer can help you choose the right bankruptcy chapter and filing to fit your specific financial needs.

For a legal consultation, call

The Individual Insolvency Register On Annulment

Once notice of the annulment is received your bankruptcy will be removed from the Individual Insolvency Register after:

  • 28 days if the bankruptcy order should not have been made
  • 3 months if the debts were paid in full or an IVA has been agreed

If an IVA has been agreed, details of this will appear on the register.

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.

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Restrictions On People Who Have Been Declared Bankrupt

Once you have been declared bankrupt, you will be guilty of an offenceif:

  • You do not disclose the bankruptcy when getting a loan or any other credit facility of 650 or more
  • When trading in a name other than that in which you were made bankrupt, you do not disclose the bankruptcy
  • You act as a director, manager, auditor, liquidator or receiver of a company without permission of the court

These offences carry a maximum penalty of 5 years in prison and a fine of1,270.

Other consequences of bankruptcy are:

  • If you wish to travel outside the State, you should tell the Official Assignee. You may be arrested if it seems to the High Court that you are leaving the State in order to avoid the consequences of your bankruptcy.
  • You cannot be granted an enduringpower of attorney on behalf of someone else, and if you hold one already, it is automatically revoked if you become bankrupt.
  • Under the Charities Act 2009, you may not be a trustee of a charity if you are adjudicated bankrupt.
  • Some professional bodies disqualify members who are adjudicated bankrupt

What Are The Cons Of Filing Chapter 7 Bankruptcy

What Do You Need to Know About the Bankruptcy Filing ...

Filing a Chapter 7 bankruptcy is not right for everyone. And even if it feels like the best debt relief option for you, it may not be once you consider some of the cons of Chapter 7.

You canât 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.

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.

If you have good credit, it will likely take a temporary hit.

Those that are able to maintain their monthly payments and keep their credit score high before filing their bankruptcy petition will see their score drop initially. But, a bankruptcy filing often does more good than harm to the filerâs credit score. Plus, once their bankruptcy discharge is granted, they can begin increasing that pesky credit score immediately.

It doesn’t erase all unsecured debts.

Some unsecured debts, like alimony or child support, can never be discharged in bankruptcy. Other things, like tax debts and student loans, can be quite hard to eliminate by filing bankruptcy.

You can lose certain types of property.

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What Are The Upsides Of Filing Chapter 7 Bankruptcy

Immediate relief in the form of a much-needed breathing spell.

The moment your case is filed with the bankruptcy court, youâre protected from creditors. Filing bankruptcy triggers an automatic stay – or stop – on all collection actions. This means all phone calls, garnishments, and collection letters have to stop. It even put at least a temporary stop to repossessions, evictions, and foreclosures.

Permanent debt relief in the form of a bankruptcy discharge.

Filing Chapter 7 bankruptcy wipes out most types of debt, including credit card debt, medical bills, and personal loans. Your obligation to pay these types of unsecured debt is eliminated when the bankruptcy court grants you a bankruptcy discharge.

Getting your bankruptcy discharge is virtually guaranteed.

If youâve never filed bankruptcy before, pass the means test, and are honest in your dealings with the bankruptcy court and the bankruptcy trustee, you can get your bankruptcy discharge in as little as 3 months. As long as you make sure you meet all requirements before and after filing your bankruptcy case, itâs basically automatic.

Youâll probably get to keep all of your stuff.

If you want, you can even keep your car after filing bankruptcy.

After filing bankruptcy, missed monthly payments and other negative marks on your credit report no longer hurt your credit score.

You’ll have better access to credit and banking.

What Does Filing Involve

The process of filing Chapter 7 bankruptcy generally takes 80 to 100 days from filing to when your debts are discharged. Youre not required to hire an attorney, but it is recommended that you go through this process with professional guidance from an attorney.

Here are some of the things you should be prepared to do during a Chapter 7 bankruptcy.

  • Complete bankruptcy counseling through an approved agency within 180 days before filing.
  • Pass a means test. The test is whether your income exceeds a certain amount. This requires you to show that you are eligible to file for Chapter 7 bankruptcy based on your states income standards.
  • File a petition with your local bankruptcy court. This will include paying court fees of up to several hundred dollars. Youll also have to submit additional information, including information about your income and expenses. Youll also need to provide your most recent tax returns.
  • Attend a creditor meeting with your bankruptcy trustee and any of your creditors who choose to appear. Your bankruptcy trustee will be assigned to you. Youll be required to answer questions about your debt, property and financial situation under oath.
  • Complete a financial management course through an approved agency. Youll need to complete the course and submit a form certifying you completed the course within 60 days of the first date set for the Meeting of Creditors.
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    What Happens To Student Loans In Chapter 13 Bankruptcy Trustee

    When you make your monthly Chapter 13 payments to the trustee, he transfers a portion of your scheduled payment to your student borrower. Whether this money reduces your principal or just covers the interest depends on the terms of your loan. While you are in Chapter 13, you continue to pay interest on student loans.

    What Can I Do If The Bankruptcy Court Doesn’t Discharge My Loans

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    What should I do if the bankruptcy court doesn’t cancel my loan, but I can’t repay it? The only way to get a student loan waiver from the government is to file a separate lawsuit called an adversarial lawsuit and ask the bankruptcy court to determine that repayment will cause an unnecessary hardship to you and your family.

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    How To Eliminate Student Loan Debt

    • Federal Student Loan Program Eligibility The first way to pay off your student loan debt is for those dealing with federal student loan problems.
    • Getting help from the government for your student loan Many states also offer several student loan abolition programs for your student loan.
    • See if your employer offers a tuition fee reimbursement. Did you know that more and more employers offer a training allowance to make it easier for their employees to finance their training?
    • Federal Student Loan Consolidation The next way to help you pay off your student debt is through federal student loan consolidation.
    • Find a payment plan that suits your ability to pay The next step in paying off your student debt is to find a payment plan that fits your ability to pay.
    • Set up an income-related repayment plan with benefits on the loan. If you’ve chosen a repayment plan and one of the default options described above still doesn’t work, federal loans offer repayment plans based on the benefits of the loan.
    • Refinancing your student loans If you have a private student loan, it is best to reduce this debt by refinancing your private loan at a lower interest rate.
    • To win more money

    What Happens To Your Assets

    Once you are declared a bankrupt, your assets will form part of your bankruptcy estate and be controlled and managed by the OA. Creditors who have provided proof of their debts can then receive dividends from your bankruptcy estate.

    Assets that can form part of your bankruptcy estate can include:

    • Anything of value belonging to you at the date of or after the making of the Bankruptcy Order and
    • Gifts given to you prior to your discharge from bankruptcy.

    Any proceeds obtained from the sale of your assets, excluding the value of the secured debt, will also be remitted to the bankruptcy estate.

    However, some assets are considered protected assets and will be excluded from the bankruptcy estate . These include:

    • Property held by you as a trustee for someone else
    • Monies in your CPF account
    • Life insurance policies held on express trust for your spouse or children
    • Any items/equipment required for the personal use in your employment, business or vocation
    • Equipment/furniture required for your familys needs
    • The remainder of your monthly income after deduction of the monthly contribution and
    • Any annual bonus or annual wage supplement paid as part of your income

    Assets that were previously used to secure your loans to creditors, and that do not belong to the category of protected assets above, can be sold by the creditors if you default on your monthly contributions.

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    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.

    Reorganize Your Debts And Catch Up On Missed Payments

    How does filing for bankruptcy affect inheritance?

    Chapter 13 bankruptcy, or reorganization bankruptcy, allows a debtor to catch up on missed mortgage or car loan payments and pay off nondischargeable debts, such as alimony, child support, and priority tax arrears, through a repayment plan. Depending on your income and amount of debt, Chapter 13 plans typically last three to five years.

    As long as you continue to make your plan payments, the automatic stay stops your lender from foreclosing on or repossessing your property. But unless you are paying off the entire obligation through your plan, you must continue to make your ongoing loan or mortgage payments while catching up on your arrears in your bankruptcy. If you don’t make your regular payments as they come due, the lender can file a motion for relief from the stay and get court permission to resume foreclosure or repossession.

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    What Is The Downside Of Filing For Bankruptcy

    Home » Frequently Asked Questions » What Is the Downside of Filing For Bankruptcy?

    Filing for bankruptcy protection is considered a statement on your ability to repay your debt to your creditors. The fact that you sought and received bankruptcy protection will remain on your credit record for as long as 10 years. Additional factors regarding what is the downside of filing for bankruptcy can include:

    • Filing for bankruptcy can negatively impact your immediate financial future.
    • Obtaining credit after filing for bankruptcy could mean increased interest rates.
    • Obtaining credit after filing for bankruptcy might require security deposits.

    Filing for bankruptcy can give you the opportunity to start over and create a new financial reality for you and your family. It can also come with many downsides that you should be aware of in order to make a fully informed decision.

    In addition to these credit issues, certain bankruptcy filings will leave you with nondischargeable debt that must still be paid back. Nondischargeable debt can include property debt, tax debt, student loans, spousal support, child support, and criminal debt. While some bankruptcy chapters will allow you to manage many of these nondischargeable debts more readily, they will not be dismissed or discharged.

    How Much Cash Can I Keep

    It depends on the exemption amount in your state. Most states allow some amount of cash to be kept under either Chapter. Keep in mind that some financial institutions may be able to take money from your accounts held with them to satisfy debts to them.

    There are some exemptions, like child support payments, alimony and public benefits like Social Security, disability payments and unemployment.

    Retirement accounts and pensions are also protected, so at least you wont have to start dining at the local soup kitchen if youre over 65 and bankrupt.

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    Your Obligations When You’re Bankrupt

    You must:

    • give the Official Receiver details of your finances, assets and creditors
    • look after your assets and hand them over to the Official Receiver with the relevant paperwork, such as bank statements and insurance policies
    • tell your trustee about any new assets or income during your bankruptcy
    • stop using credit cards and bank or building society accounts
    • not get credit over £500 without telling the creditor that you’re bankrupt
    • not make payments direct to your creditors

    You may be able to open a basic bank account once you are bankrupt.

    Even after the bankruptcy period, you may find it difficult to get credit. The Official Receiver does not send any form of notice to credit reference agencies.

    Details of your bankruptcy are also kept on the Insolvency Register which is maintained by the Bankruptcy and Chancery Office at the High Court and contains records of all insolvencies in Northern Ireland for the last ten years.

    Are You Considering Filing For Bankruptcy We Can Help

    Filing For Bankruptcy Process – Start To Finish

    Being unable to meet your expenses or facing lawsuits for unfulfilled financial obligations is a tough situation to be in and one that you think you cant get out of. Bankruptcy Canada understands your predicament and is committed to helping you resolve your debt issues.

    If youre looking for an effective debt relief solution that is best for your financial situation, Bankruptcy Canada can help. Our knowledgeable and highly experienced Licensed Insolvency Trustees will thoroughly evaluate your financial condition and recommend a solution that will best meet your needs. Meanwhile, also feel free to go through our extensive database of relevant articles to find the answers youre looking for.

    To consider your options and take the next step towards debt relief, contact us by submitting a short form and one of our Licensed Insolvency Trustees will get in touch with you within 24 hours.

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    Think About The Long Term

    When you need debt relief, it’s natural to focus mostly on what bankruptcy, debt settlement or any other alternative can do for you right now. But because each of these options can affect your credit score and financial situation, it’s crucial that you take the time to research every course of action and consider both the short- and long-term effects of each.

    Before you go through with one of them, consider consulting with a credit counselor or bankruptcy attorney to get an objective, expert opinion. Credit counselors generally don’t charge for this service, and many bankruptcy attorneys offer free consultations as well.

    Between your own research and expert advice, you’ll have a better chance of choosing the correct path forward.


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