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What Does It Mean When You File For Bankruptcy

Can A Disabled Veteran File A Chapter 7 Bankruptcy

What Is The Bankruptcy Means Test?

As a result, you would have been barred from filing a Chapter 7 bankruptcy. The passage of the Honoring American Veterans in Extreme Need Act allowed this important change so that VA Disability Compensation is now exempt from the means test. As mentioned, there is a second income calculation in all bankruptcies.

What Is A Trustee And What Is The Trustees Role

A Licensed Insolvency Trustee is the only professional who can administer a bankruptcy or consumer proposal in Canada. This means that you need to engage a Trustee in order to file your bankruptcy.

Licensed Insolvency Trustees are highly qualified professionals and are federally licensed by the Office of The Superintendent of Bankruptcy. Trustee fees are regulated under the Bankruptcy and Insolvency Act.

The federal government requires the Trustee to perform an assessment of your financial situation to determine if bankruptcy is the best option for you.

With your help, the Trustee will examine your financial situation including your assets, income, expenses, and debt level. You may have additional options, which the Trustee will explain and describe. The Trustee will also fully explain the bankruptcy process so you can decide if you should declare bankruptcy.

If you choose to file for bankruptcy or to file a consumer proposal the Trustee will prepare the necessary paperwork, review it with you, and file it with the Office of the Superintendent of Bankruptcy.

Representation You Can Rely On

Filing for bankruptcy can be a complicated and detailed process, which is why you may want to consider hiring an experienced attorney.

A missed deadline or form, or undisclosed information can delay or even cause your bankruptcy case to be dismissed. An experienced bankruptcy attorney knows the process and the details and will work with you to make sure all of your information is in order so your case can proceed as smoothly as possible.

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Role Of The Case Trustee

When a chapter 7 petition is filed, the U.S. trustee appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. 11 U.S.C. §§ 701, 704. If all the debtor’s assets are exempt or subject to valid liens, the trustee will normally file a “no asset” report with the court, and there will be no distribution to unsecured creditors. Most chapter 7 cases involving individual debtors are no asset cases. But if the case appears to be an “asset” case at the outset, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. Fed. R. Bankr. P. 3002. A governmental unit, however, has 180 days from the date the case is filed to file a claim. 11 U.S.C. § 502. In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim. A creditor in a chapter 7 case who has a lien on the debtor’s property should consult an attorney for advice.

What Does Bankruptcy Discharged Mean: Restrictions Placed On Undischarged Bankrupts

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By enabling debtors to file an assignment in bankruptcy or consumer proposal, the Bankruptcy and Insolvency Act provides relief to an honest but unfortunate debtor. Garnishment of wages ceases, legal actions and collection calls cease, and the debtor receives some breathing space. If a bankrupt fails to fulfill his or her obligations, what happens? Can they receive a discharge from bankruptcy?

This Brandon Blog examines a recent case from Nova Scotia dealing with what does bankruptcy discharged mean for both a bankrupt person and for the licensed insolvency trustee. I also describe what does it mean for an undischarged bankrupt if the bankruptcy trustee gets its discharge when the bankrupt person does not have their bankruptcy discharge.

I will eventually get to the Court case, but there is first some background information that I will provide which sets the stage for a better understanding of the Court decision.

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Are Debt Collectors In Canada Allowed To Keep Calling Me If I Declare Bankruptcy

Once a bankruptcy claim is filed, all creditors and collection agencies are required by law to stop contacting you. Additionally, a creditor cannot garnish your wages.

You can continue to receive calls from secured creditors. This applies to a mortgage, lien on a car, or debt for alimony or maintenance.

Where Bankruptcy Doesnt Help

Bankruptcy does not necessarily erase all financial responsibilities.

It does not discharge the following types of debts and obligations:

  • Loans obtained fraudulently
  • Debts from personal injury while driving intoxicated

It also does not protect those who co-signed your debts. Your co-signer agreed to pay your loan if you didnt, or couldnt pay. When you declare bankruptcy, your co-signer still may be legally obligated to pay all or part of your loan.

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Is There An Exemption For Va Disability In Bankruptcy

While this is a matter to discuss with your bankruptcy attorney, its usually best not to use the federal exemptions only because they provide an exemption for VA disability benefits. There is a federal nonbankruptcy exemption that applies to all states. This exemption is not part of the Bankruptcy Code but it does apply to bankruptcies.

Keep Track Of Your Credit During The Process

What does corporate bankruptcy really mean for consumers?

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.

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What Does Bankruptcy Discharged Mean: At Long Last The Nova Scotia Case

The Nova Scotia bankruptcy case deals with the discharge of the Trustee in a personal bankruptcy matter. Once the Trustee brings on the bankrupts application for discharge and a discharge Order is made by the Court, and the Trustee completes the rest of the administration of the bankruptcy estate, the Trustee is entitled to a discharge. If the bankrupt did not receive an absolute discharge and has not completed his or her duties, including complying with a conditional discharge order, eventually, the Trustee can still apply for its discharge. Upon the Trustees discharge two things occur:

The bankrupt goes into bankruptcy purgatory. No discharge occurs. The Trustee has fulfilled its obligation to present the bankrupts discharge request to the court and the court has issued an Order. Whenever the bankrupt wants to prove they have fulfilled all their obligations, obeyed the discharge order, and now deserve an absolute discharge, he or she will need to retain a bankruptcy lawyer and apply to the Bankruptcy Courts.

On the day the Trustee is discharged, the stay of proceedings that had protected the bankrupt from any enforcement action by creditors whose debts were owed at the date of bankruptcy no longer applies. As a result, creditors can now pursue the bankrupt person since the debts have not been eliminated and the stay of proceedings is no longer in place.

The decision in Frost , 2021 NSSC 296 can be boiled down to the following facts:

what does bankruptcy discharged mean

What Happens To My Regular Income If I Declare Bankruptcy In Canada

Your wages are not affected by your bankruptcy, but part of your duties during bankruptcy includes providing your trustee with your household monthly earnings and expenditures. Additionally, if your income changes or you gain or lose a dependent, you must inform your trustee.

You may be required to make monthly payments to your trustee. These are called surplus income payments. Your trustee determines whether you have to make surplus income payments based on your average earnings over the bankruptcy and the number of people in your household.

Watch the video below to learn more about surplus income payments.

Video transcript: Meet Stephanie, the mother of a young son, James, who is just about to enter Primary School. Recently, Stephanie has overextended her credit and, despite her best efforts, is unable to pay her bills. Realizing that she needed to speak to an expert, Stephanie found a Licensed Insolvency Trustee located in her area and has gone to meet with her. After speaking to the trustee, Stephanie has determined bankruptcy was the most appropriate option for her.

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Do You Have To Pass The Means Test To File Bankruptcy

If your income is greater than the median income in your state, you must pass the full means test to file a Chapter 7 bankruptcy. The means test does not include social security income.

As a result, you would have been barred from filing a Chapter 7 bankruptcy. The passage of the Honoring American Veterans in Extreme Need Act allowed this important change so that VA Disability Compensation is now exempt from the means test. As mentioned, there is a second income calculation in all bankruptcies.

You May Make Surplus Income Payments

What Does It Mean to File for Bankruptcy?

When you file for bankruptcy, you must do the following:

  • disclose to the LIT information about all of your assets and liabilities
  • advise the LIT of any property that was sold or transferred in the past few years
  • surrender all your credit cards to the LIT
  • attend the first meeting of creditors
  • attend two counselling sessions
  • advise the LIT in writing of any address changes
  • if required, attend an examination at the Office of the Superintendent of Bankruptcy and
  • assist the LIT as needed in administering your estate.

You may be required to make additional payments to your LIT for distribution to your creditors.

In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.

Each month during the bankruptcy process, you must submit a copy of your pay stubs and proof of other income to the LIT. The LIT then calculates your surplus income.

Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the OSB annually. The larger your family, the more you are allowed to keep the more you earn, the more you are required to contribute.

In other words, if your household income exceeds the level set by the OSB, then you must make additional payments to your LIT during your bankruptcy.

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Different Types Of Bankruptcy

For individuals, there are two main types of bankruptcy cases. Most individual debtors file for Chapter 7, which can also be described as âstraightâ bankruptcy or âliquidation.â Under this plan all non-exempt assets are converted to cash , and secured creditors may have the item they financed turned over to them , unless the debtor reaffirms the debt with the courtâs approval prior to obtaining a discharge. Chapter 13, also called âreorganization,â is an option for people with regular income and debts that are less than the limits allowed by law. When you complete a Chapter 13 plan, you have the satisfaction of keeping your assets, paying your creditors, and possibly discharging some of your debts.

Bankruptcy is a serious step. If you choose to file Chapter 7 or Chapter 13, you will probably need to hire an attorney. Be sure to find an attorney who has experience handling the type of bankruptcy case you plan to file. The following overview of Chapter 7 and Chapter 13 will give you some idea of whatâs involved.

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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Will My Canadian Student Loans Go Away If I Declare Bankruptcy

If you were a student, either part-time or full-time, less than seven years from the date that you declared bankruptcy, you will have to repay your student loan debt, including the interest charges. Check with Canada Student Loans to learn what they consider to be the last official date you were in school.

If your official last day is under seven years ago, you may still be able to get your student loan debts discharged. You can retain a lawyer and make an application to the court.

You must meet the following requirements:

  • You have been out of school for a minimum of five years
  • You acted in good faith with regard to the liabilities under the loan
  • You have and will continue to experience financial difficulty to such an extent that you will be unable to pay the liabilities under the loan

So Does It Mean You Are Off The Hook To Pay Down Your Debt

What Actually Happens When You File For Bankruptcy

Whether you get freed up from your debt or have to pay it back depends on what type of bankruptcy you fill. If you file for Chapter 7 bankruptcy youre not required to pay off your debt, as it will be paid by liquidating your assets. This is a swift process, lasting up to six months, explains Gonzalez.

Chapter 13, on the other hand, is actually a restructuring of your debt. Under this option, you are required to create a three- to five-year repayment plan for all your debts, she explains. This arrangement allows you to extend your payment periods while keeping all your assets.

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What Does It Mean When A Store Files For Bankruptcy Protection

Preppy mass-market mall brand J.Crew filed for Chapter 11 bankruptcy protection Monday, making it the first major retailer to seek bankruptcy protection as a result of the pandemic.

Along with hundreds of other brick-and-mortar businesses, J.Crew closed numerous stores in March 500, in its case and furloughed 11,000 employees as state governors issued orders to close nonessential businesses to curb coronavirus infection rates. It expects to lose $900 million in sales because of the store closings, according to a filing in U.S. Bankruptcy Court in Richmond, Virginia, by Michael Nicholson, the company’s chief operating officer.

A Chapter 11 filing is different from a filing under Chapter 7 of the U.S. Bankruptcy Code. Under Chapter 7, a company loses control of the business, some or all of which can be sold off by a third-party trustee to meet the company’s debts.

A Chapter 11 filing doesn’t mean your favorite store is about to disappear. Instead, Chapter 11 offers a company a way to reshape the business by reorganizing debt and eliminating costly real estate, said Kevin Carey, a former bankruptcy judge and partner with the Hogan Lovells law firm.

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In J.Crew’s case, it is using the bankruptcy process to give any debt holder a piece of its reorganized equity.

Some companies who sought bankruptcy protection before the pandemic were granted court approval to take a break from paying their rent.

What Happens To Your Credit

Bankruptcy stays on your credit report for seven to ten years. While filing for bankruptcy significantly damages your score, it doesnt mean that it consistently holds you back the entire period the impact to your credit score tends to diminish over time, shares Gonzalez. Stay focused on rebuilding it, be responsible, and keep monitoring your credit to minimize the damage.

So just how much will bankruptcy impact your score? While the drop will fluctuate on a case-by-case basis, Debt.org maintains that someone with an average 680 score would lose between 130 and 150 points in bankruptcy, while an individual who started out with near-perfect creditlike an above-average 780 scorewould lose between 200 and 240 points. Here are 10 things you probably think will hurt your credit score but actually wont.

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