Get Help Choosing Between Chapter 7 & Chapter 11 Bankruptcy
is not merely mandatory for anyone planning to file bankruptcy, it may be the only way to effectively decide which chapter is best for your situation or even if bankruptcy is your best course of action.
Dont leave this to friends, relatives, workmates, or clergy. Seek professional help. Seek out a reputable bankruptcy attorney, or a certified credit counseling agency.
An experience professional will help you sort the financial facts from your emotions, guiding you toward the best of your bankruptcy options, or perhaps even demonstrating that your condition, though difficult, isnt as dire as you imagined. With effective professional counseling laying out the alternatives , you may yet avoid bankruptcy.
If bankruptcy proves inevitable, however, a professional credit counselor will also help you plan to rebuild your credit and financial life once your bankruptcy is finalized.
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Am I Going To Have To Go To Judge When I Submit Bankruptcy
Short Answer: generally in most personal bankruptcy situations, you simply need to go to a proceeding called the a?meeting of creditorsa?, that will be this short and simple meeting what your location is asked a couple of questions by the bankruptcy proceeding trustee. Whilst conference was presented at the courthouse, the appointment does not take place in a courtroom.
Sometimes, if issues happen, you may need to appear at a hearing before a bankruptcy proceeding assess. In a Chapter 13 situation, you may have to look at a hearing after judge chooses whether your own strategy must certanly be accepted . If you wish to head to court, you can expect to receive see from the legal date and time from judge or your attorney who will guide you to prepare for the way you look.
Are You Eligible For Chapter 7 Bankruptcy
You must meet certain eligibility criteria to qualify for chapter 7 bankruptcy. This type of bankruptcy is available to individuals, partnerships, corporations, and limited liability companies as long as the other requirements are met. However, only individuals may have their debts discharged under Chapter 7 bankruptcy. For corporations, partnerships, and LLCs, the purpose of a Chapter 7 is to close the business and liquidate assets in order to pay off its creditors. In general, a business will only be in Chapter 7 if their bankruptcy filing for Chapter 11 was dismissed or converted by creditor request.
The individual consumer must also meet income requirements, pass a means test, and complete mandatory credit counseling prior to filing for Chapter 7 bankruptcy.
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Who Qualifies For Chapter 7 Bankruptcy Should I File
There is a difference between who is allowed to file and who should file.
Most people who earn under the median income for their state, based on their household size, are able to file. This is because they pass the means test according to bankruptcy laws. The means test takes into account your average monthly income over the last 6 months.
If you donât have a job or earn near the minimum wage, you will likely qualify for Chapter 7 bankruptcy. If you don’t pass the means test, you can file a Chapter 13 bankruptcy but not Chapter 7.
Folks looking for a fresh start typically fall into one of three categories:
Those who should file for Chapter 7 bankruptcy right now
Those who should wait a little bit of time and then file for Chapter 7 bankruptcy
Those who should not file for Chapter 7 bankruptcy.
What Is The Automatic Stay
The automatic stay is in place the instant a debtor files a bankruptcy petition and lasts until the debtors bankruptcy case closes. It protects the debtor during the bankruptcy by stopping or preventing collection efforts, wage garnishments, bank account levies, car repossessions, and lawsuits by a debtors creditors. 11 U.S.C. § 362. Creditors listed by the debtor in his or her filing will receive Notice in the mail of the bankruptcy filing.
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Drawbacks Of Chapter 7 Bankruptcy
Before you decide to file, there are several drawbacks of Chapter 7 bankruptcy to be aware of.
- You may have liens placed against your property. A lien gives your lender a stake in your property. If the property is sold, the lender can be paid from the earnings.
- You may lose property. Your property may be sold in order to pay creditors.
- Your credit may be damaged. Derogatory public records, including bankruptcies and foreclosures, included in your credit reports have the potential to reflect poorly on your credit and can hurt your ability to qualify for new loans.
What Is Bankruptcy Discharge
When a debtor is granted a discharge, he or she is no longer personally liable for that debt. In the case of secured property such as a car or home, a creditors only action to collect would be to repossess the car or foreclose on the home.
Bankruptcy is intended to give an honest but unfortunate debtor a fresh start. But only individual debtors and not business entities are entitled to a discharge. 11 U.S.C. § 727.
Those considering filing a Chapter 7 case should keep in mind that a discharge is not guaranteed a discharge may be denied. Also, liens on secured property are not discharged. There are many exceptions to discharge that you should be aware of, such as alimony and child support, certain taxes, and debts incurred by causing death, injury, or property damage while DUI. 1 U.S.C. § 523. Consulting with a bankruptcy attorney is advised.
If a creditor holds a lien on collateral, such as a car or house, that creditor is referred to as a secured creditor. A secured creditor may be able to repossess or foreclose after your bankruptcy case closes, unless you reaffirm that debt . 11 U.S.C. § 524.
If a creditor alleges that the debtor incurred debt by false pretense or fraudulently, that creditor must file a separate action to determine whether those debts are dischargeable. 11 U.S.C. § 523 Fed. R. Bankr. P. 4007.
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What Is Chapter 7
Bankruptcy is a serious business, so you need to understand it clearly. Chapter 7 of Title 11 in the U.S. bankruptcy code controls the process of asset liquidation. A bankruptcy trustee is appointed to liquidate nonexempt assets to pay creditors after the proceeds are exhausted, the remaining debt is discharged. There are eligibility requirements to file Chapter 7, such as the debtor must have had no Chapter 7 bankruptcy discharged in the preceding eight years and the applicant must pass a means test. This process is also known as straight or liquidation bankruptcy.
What Debt Can Be Erased
Chapter 7 bankruptcy can erase the following common debts:
Personal loans and payday loans
Judgments from credit cards and debt collection agencies
These debts are known as dischargeable debts.
The moment someone files bankruptcy, the automatic stay goes into effect. This temporarily stops anyone from collecting any debts you owe them.
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Chapter 7 Bankruptcy Is A Legal Process That Can Help Individuals Get Relief From Debts By Discharging Or Clearing Some Or All Of Whats Owed
If you qualify, Chapter 7 bankruptcy may allow you to discharge a variety of debts, but typically excludes obligations like child support, student loans or tax debt.
The main benefit of filing for Chapter 7 bankruptcy is that it can give the honest debtor a fresh start, says bankruptcy attorney Richard Symmes, principal attorney at Symmes Law Group.
But it isnt a simple fix-all. The repercussions of filing Chapter 7 bankruptcy can include losing some of your physical assets and having your credit take a major hit.
Chapter 7 bankruptcy may be able to offer the financial reset you need, but you should know about the drawbacks before you consider filing.
Similarities Between Chapter 7 & Chapter 11 Bankruptcy
For all their differences, Chapters 7 and 11 bankruptcy have several things in common. Consider:
- The automatic stay instantly blocks most creditors from harassing you for payment the stay stops wage garnishments, levies, and certain lawsuits. Some legal actions may continue, including criminal cases, some family law cases, and government civil enforcement proceedings are immune to bankruptcys automatic stays. But dont abuse the privilege: first-time bankrupts benefit from the stay those who have filed and dismissed cases in the past six months cant expect protection.
- Anyone can file for Chapter 7 or 11: individuals, married couples, business entities. Also common to both: The required time period must pass before filers who have received a debt discharge can qualify for a second bankruptcy discharge.
- A credit counseling course must be completed within 180 days before filing proof of completion must accompany the petition and other official bankruptcy forms.
- A 341 meeting of creditors must be attended by the filers, where documentation supporting the petitions financial disclosures is verified. Filers verify their identities, testify under oath, and answer questions posed by the trustee as well as creditors.
- There will be fees Attorneys fees. Filing fees. Administrative fees. Trustee fees. They can add up fast.
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Benefits Of Chapter 7 Bankruptcy
Although the number of bankruptcy filings decreased by 12 percent between 2010 and 2011 across the United States, roughly 1.37 million individuals and businesses filed for bankruptcy in 2011. In the state of North Carolina, 23,129 people filed for bankruptcy and achieved debt forgiveness in 2011. A popular option for in-debt individuals is Chapter 7 bankruptcy, which allows debtors to liquidate or sell assets to pay back creditors. While many people have associated bankruptcy with financial failure or ruin, there are actually a number of benefits associated with Chapter 7 bankruptcy.
If its time to address your debt, the attorneys at Bradford Law Offices, PLLC can help. Its important to understand all of your options. The Bradford Law Offices, PLLC attorneys can help you understand the benefits of Chapter 7 bankruptcy and whether its the right choice for you. Bradford Law Offices, PLLC helps clients each day who are suffering with debt. Danny Bradford is a North Carolina native and a proud graduate of the University of North Carolina at Chapel Hill. He has helped more than 3,000 clients address their consumer debts. To learn more about filing for bankruptcy, contact our Raleigh Chapter 7 bankruptcy lawyers of the Bradford Law Offices, PLLC, today at 758-8879 and schedule a free consultation.
Exceptions To The Means Test Requirement
Most but not all people who file for Chapter 7 bankruptcy protection must pass the means test in order to qualify.
The following filers may not have to pass the means test after completing the Statement of Exemption from Presumption of Abuse Under Â§707 form:
- Disabled veterans that file to eliminate debt incurred while on active military duty
- Filers with debt that primarily came from operating a business
- Members of the National Guard or military reservists who are called to active duty before filing
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Chapter 7 Title 11 United States Code
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Chapter 7 of Title 11 of the United States Code governs the process of liquidation under the bankruptcy laws of the United States, in contrast to Chapters 11 and 13, which govern the process of reorganization of a debtor. Chapter 7 is the most common form of bankruptcy in the United States.
What Is Chapter 7 Liquidation Under The Bankruptcy Code
The two types of bankruptcy most commonly filed by consumer debtors are called Chapter 7 Bankruptcy and Chapter 13 Bankruptcy, after the Bankruptcy Code sections where the applicable law is found. Whether you file under one Chapter or the other depends upon several factors, including your current income, the value of your assets, and why you feel you need to file a bankruptcy petition.
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Learn The Basics About Chapter 7 How It Works And What It Can Do
By Cara O’Neill, Attorney
COVID-19 Updates: Retirement and Stimulus Fund Protections Safe Filings.
If you’re one of the millions laid off due to COVID-19, bankruptcy can erase bills while keeping most retirement accounts intact. And you don’t need to worry about losing your stimulus fundsthe new bankruptcy “recovery rebate” law protects stimulus checks, tax credits, and child credits. Bankruptcy lawyers will consult with you virtually, and courts continue to hold 341 creditor meetings telephonically or by video appearance unless an in-person meeting is necessarysee the U.S. Trustee’s 341 meeting status webpage for details.
Streamline your researchtake our bankruptcy quiz to identify potential issues with your bankruptcy case.
Chapter 7 bankruptcy is the type of bankruptcy most people prefer to file because it’s quick and filers aren’t required to pay back any debt. In this article, you’ll learn about the basics of Chapter 7 bankruptcy, including who can file, the forms you’ll need, how the process works, and what happens to your property and debts.
For step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.
What Is Chapter 7 Bankruptcy & How Do I File
Chapter 7 bankruptcy is a means to eliminate unsecured debts, surrender unwanted personal property and gain a fresh financial start. The process typically spans 4 5 months, although court protection is immediate once the case is filed. This means no more creditor calls, letters, collections or legal actions such as wage garnishment.
Here are the general steps for filing:
- Meet with a qualified bankruptcy attorney to ensure you eligible to file. The main qualifiers are:
- Your total household income over the previous 6-month time period. Investigation of your household income and expenses is known as a Means Test
- Equity or assets you possess, to ensure everything can be protected with the allowed exemptions
- Timing of a previous filing. You are eligible to file a bankruptcy every 8 years from the date of your previous filing. If it has not been 8 years, you still qualify to file a Chapter 13 bankruptcy to gain creditor protection and debt relief.
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What Does Chapter 7 Bankruptcy Mean
Chapter 7 Bankruptcy, also called liquidation bankruptcy, is defined under Title 11 of the Bankruptcy Code. Chapter 7 Bankruptcy allows a bankruptcy trustee to take non-exempt, unencumbered assets and sell the assets to pay unsecured debt in priority order.
Certain secured debts may be exempt property as defined by state and federal bankruptcy laws and not subject to liquidation. A creditor holding an unsecured claim will get a distribution of the available funds if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. All non-exempt debts not paid in full during the payment process will be discharged at the end of the bankruptcy process. If a filing debtor does not have any qualifying assets to liquidate, the case is considered a no-asset case and all of the qualifying non-exempt debts will be discharged.
To qualify for relief under Chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. One of the primary purposes of filing a Chapter 7 Bankruptcy is to discharge certain unsecured debts. The debtor has no liability for discharged debts. In a Chapter 7, a discharge is only available to individual debtors, not to partnerships, corporations, or business entities.
Could I Run Everything After Personal Bankruptcy
Small Solution: Positively! This is simply one of the many a?urban legendsa? that surround personal bankruptcy. People think they cannot possess anything for a period after declaring case of bankruptcy. You can keep your excused residential property and anything you obtain following bankruptcy proceeding try submitted. However, any time you obtain an inheritance, real estate settlement, or life insurance policies within 180 period after processing case of bankruptcy, that money or land may need to be provided with towards lenders in the event that residential property or money is not excused.
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What To Do After Chapter 7 Bankruptcy
Push the re-start button on your financial life.
Thats the first thing anyone should do after having debts discharged in Chapter 7 bankruptcy. Hopefully, that re-start button includes a plan for reduced spending and paying all bills on time.
The easiest way to do that is to draw up a budget that realistically accounts for your income and expenses.
If youre not good at that, call a nonprofit credit counseling agency and get some free assistance from their professional certified counselors. Helping consumers come up with an affordable monthly budget is their specialty.
They can give you the benefit of their training and experience at drawing up monthly budgets, plus tips on how to make the bottom line come out in your favor every month.
If you get in the habit of paying bills on time, you will begin to , and youll regain favor with lenders and credit card companies. A few years of good practice and you and your creditors will forget this ever happened.