What Is An Automatic Stay
After you file for bankruptcy, you have the protection of an immediate, but temporary, automatic stay. The automatic stay can, for example, immediately stop a foreclosure, an eviction, car repossession, or wage garnishment. It can also stop debt collection, harassment, and disconnection of utilities.
The automatic stay may provide a powerful reason for filing for bankruptcy. In most of the situations listed above, the automatic stay can buy you a few days or weeks in which to figure out your next move. If your primary motivation in filing bankruptcy is to gain the benefits of the automatic stay, you donât need to file all of your papers at once. You just need to file the three-page petition, a signature declaration, and a listing of your creditors. In addition, within 180 days prior to filing, you will have to visit an approved credit counseling agency for advice and budget analysis. You will have to file a certification of such counseling when you file your petition. You have 15 days in which to file the rest of your papers. If you donât, your case will be dismissed.
What Is A Chapter 7 Bankruptcy Lawyer
What is a Chapter 7 Bankruptcy Lawyer? Chapter 7 may be precisely the relief you need if you have dischargeable debt and relatively few assets. This chapter of the bankruptcy code offers people the opportunity to make a fresh financial start by eliminating a substantial portion of their debt. A Chapter 7 bankruptcy lawyer Las Vegas, NV
Bankruptcy Is Not A Bad Thing
Bankruptcy can be a great relief to those who are struggling with debt. If youve tried your best to pay back what you owe, but just havent been able to do so, bankruptcy may really help! But there is one important thing that makes the difference between filing for bankruptcy and getting it all taken care of quickly versus having an unpleasant experience: hiring the right team.
According to Akron chapter 7 bankruptcy lawyer : If you are considering filing for bankruptcy, there are some important things to know before you make the decision. The most important is to get help from a knowledgeable team of experts.
These are the people responsible for making sure your case is done right and really benefits you.
Bankruptcy may seem like a very stressful thing to deal with, but it doesnt have to be. It can actually save your life! You just need the right team on your side so you dont make any mistakes along the way and end up worse off than when you started.
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Who Should Wait To File
Certain activities can complicate a Chapter 7 bankruptcy and waiting a little bit of time can help. If you’re still relying on your credit cards to make ends meet or you’ve made large purchases in the last 6 months, then it’s best to wait to file and pay off your most recent charges first.
If you paid back or transferred property to a family member or friend in the last year, then itâs best to wait to file, if you can. You have to disclose these activities in your bankruptcy paperwork and your trustee will ask you about them.
If you’re suing someone or planning to sue someone, then itâs best to hold off on filing bankruptcy until you know the final outcome of that case, if possible. People often delay Chapter 7 bankruptcy if theyâre expecting a personal injury settlement.
Also, if you owe your landlord money and you don’t plan to move, try to catch up on missed rent payments before filing. The same generally goes for car loans, if you want to keep the car.
Finally, if you expect your financial situation to get worse, then you may want to delay your filing. You can only file Chapter 7 bankruptcy once in an 8 year period, so you donât want to file if you know that youâre going to fall into more debt.
Do Not File The Wrong Form
While you are filing for bankruptcy, you will have to go through a lot of paperwork and fill many forms, such as petitions, bonds, financial statements, and other essential documents. If you have not hired an attorney for yourself, its your responsibility to understand the terms and file the correct bankruptcy form.
Bankruptcy is a long process, and it does not end very easily. It takes almost a year to complete all the credentials. If you owe a lot of assets or cash, you will find it a lengthy and challenging job.
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You Can Still Get Loans
Some people think their credit will be ruined forever once they file for bankruptcy. People assume they wont be able to buy a house or a car, Brooks explains. But thats not true. A lot of people buy cars and homes after bankruptcy. It may take some time to rebuild your credit if you want a lower interest rate. But you can usually get a loan fairly quickly as long as youre willing to pay a higher interest rate.
Alternatives To Chapter 7 Bankruptcy
Alternatives to bankruptcy may be able to help you get the fresh start you need. The one that’s right for you will depend on your financial situation and the types of debts you owe. Let’s go over each option.
Debt Settlement:You can negotiate with your creditors. If you’ve fallen behind on payments or are about to, you can contact your creditor to discuss the issue. You may be able to work out an affordable payment plan or negotiate a debt settlement for less than the full amount owed. This is especially true with credit card debt. Typically, a settlement needs to be paid in a lump sum.
Repayment Plan: Entering into a debt management plan with an agency is another option. Unlike in debt settlement, a debt management plan involves paying back your debt over time on more doable terms than you have now. Typically only unsecured debts can be included in a debt management plan.
Debt Consolidation: Taking out a debt consolidation loan to pay off your debts is another debt relief option. You would then have only one monthly payment to make to the new creditor. These loans often offer lower interest rates than what you’re already paying.
Another option is selling your valuable property to pay back creditors. But be careful. The money you get for your property may not be enough to pay off or settle all of your debts. You may end up having to file for bankruptcy anyway.
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Who Can File For Chapter 13 Bankruptcy
In order to file for this type of debt relief, you have to meet certain requirements. If you dont, youll have to file for another type of bankruptcy or find a different solution. Business entities cant file for Chapter 13 , so that means your corporation or LLC cannot use this law for debt relief.
You may not have discharged debt through this type of bankruptcy within the past 2 years or through a Chapter 7 bankruptcy within the past 4 years. You cant use it if the courts dismissed a prior bankruptcy petition within the past 180 days, either.
- Show proof that youve completed credit counseling with an approved agency within the past 6 months
- Owe less than $336,900 in unsecured debt
- Owe less than $1,010,650 in secured debt
- Have filed your income tax returns for the previous four years
- Have enough income to repay your debts
When Bankruptcy Is The Best Option
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Bankruptcy isnt the end of the world. It may even be good for you.
Bankruptcy stops collection calls, lawsuits and wage garnishments. It erases debt. And despite what youve heard, bankruptcy may help your credit scores.
But thats not the whole story. Most people struggle so long with their debt that their credit is already battered by the time they file for bankruptcy. And once they do, their scores typically rise, not fall. If the debt is erased which is known in bankruptcy court as a discharge scores go up even more.
Within a year, youre way better off, says Jaromir Nosal, assistant professor of economics at Boston College, who co-authored a study for the Federal Reserve Bank of New York about the effects of bankruptcy. Its a pretty rapid rate of recovery.
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Examples Of Who Qualifies For Chapter 13 Bankruptcy
Quinn’s Case: Quinn isn’t considering Chapter 13. She qualifies for Chapter 7 and wouldn’t benefit from Chapter 13.
Aurora’s Case: Aurora isn’t considering Chapter 13or any bankruptcy chapter. It would be more expensive for her to file for bankruptcy than to pay off her debt another way.
Declan is considering filing for Chapter 13. Even though he qualifies for Chapter 7, he would only be able to discharge $2,000. By contrast, in Chapter 13, he can pay off his support arrearages over time and discharge his credit card debt.
What Debt Can And Cant 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 âdischargeableâ debts.
The moment someone files bankruptcy, a rule called the âautomatic stayâ goes into effect. This temporarily stops anyone from collecting any debts you owe them.
Chapter 7 bankruptcy cannot erase the following types of debts:
Child support and alimony
Recent tax debts and other debts you owe the government like fines
Student loans can usually not be erased
These debts are known as non-dischargeable debts.
Secured debts are debts that are backed by property, such as a mortgage backed by a house or a car loan backed by a car. If you want to keep your property that secures a debt, you cannot erase the debt in Chapter 7 bankruptcy. Before you file, you must also make sure youâre current on your debt payments. If youâre willing to give up the property, then Chapter 7 bankruptcy can erase secured debts.
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Are You Getting A Refund
Refunds that are issued as a result of returns for years prior to the year of bankruptcy are considered to be the property of the estate in bankruptcy. As a result, these refunds will be sent to the trustee. Any refunds issued in relation to returns for years subsequent to the year of bankruptcy will be sent to you, unless the trustee has obtained a court order.
For the year of bankruptcy, any issued refund related to the pre-bankruptcy return will be sent to the trustee. Issued refunds related to the post-bankruptcy return will also be sent to the trustee if your bankruptcy assignment date is July 7, 2008, or later. Post-bankruptcy refunds that are issued for bankruptcies with an assignment date prior to that will be sent to you, unless the trustee has obtained a court order or has provided us with an Authorization and Direction letter.
Can I Keep My Property If I File Chapter 7 Bankruptcy
In 95 percent of Chapter 7 bankruptcy cases, people are able to keep all of their property. The Bankruptcy Code has rules in place rules called âexemptionsâ that allow you to keep several types of property, such as cash, clothes, furniture, cars, etc. up to a certain dollar amount, known as âexemption limits.â
The specific exemptions you can use to keep your property depend on your state. Many states have âwildcard exemptionsâ that allow you to keep any property as long as itâs worth less than a certain amount. For the 19 states that permit âfederal bankruptcy exemptions,â the wildcard ceiling is a little over $10,000, meaning that you can keep property that adds up to be less than about $10,000.
If your property value exceeds the exemption limit that applies, the trustee may seize the property and sell it to pay back your creditors. This is why people call Chapter 7 âliquidation bankruptcy,â although any liquidation rarely takes place.
Property that isnât protected by exemptions is considered ânonexempt property.â The most common forms of nonexempt property are expensive cars and homes.
Temporary Problems With Housing Financing And Banking
Some areas of your life will be more challenging to negotiate for a year or two after filing for bankruptcy, specifically, renting or leasing housing, financing a car, and establishing a bank account. So it’s essential to have these things in place before filing. And don’t plan on making changes soon.
Tip. If you’ll be letting go of a house and you’re worried about moving your children’s schools, rent something in the area, if possiblebefore filing, of course.
What’s The Difference Between Chapter 7 & Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 bankruptcy share a few similarities. Both personal bankruptcy options are available to individuals, and both offer you the opportunity to discharge certain debts. Both options immediately impose an automatic stay to keep creditors from taking further action against you, giving you protection during the filing process.
Heres the primary distinction: Chapter 7 bankruptcy is a liquidation of debts, and Chapter 13 is a reorganization of debts.
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Bankruptcy Normally Lasts For 3 Years And 1 Day From The Day We Accept Your Bankruptcy Form
Your bankruptcy period starts from the day we accept your bankruptcy application. If a creditor makes you bankrupt, the bankruptcy period starts from the date you file a statement of affairs that we accept. In some cases, your trustee can lodge an objection to extend the bankruptcy for up to eight years.
When Should I Declare Bankruptcy
When asking yourself Should I file for bankruptcy? think hard about whether you could realistically pay off your debts in less than five years. If the answer is no, it might be time to declare bankruptcy.
The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them forever. If some combination of bad luck and bad choices has devastated you financially, and you dont see that changing in the next five years, bankruptcy is your way out.
Even if you dont qualify for bankruptcy, there is still hope for debt relief. Possible alternatives include a debt management program, a debt consolidation loan or debt settlement. Each one of those choices typically require 3-5 years to reach a resolution, and none of them guarantees all your debts will be settled when you finish.
Remember that bankruptcy carries significant long-term penalties. It is stuck on your credit report for 7-10 years, which can make getting loans in the future very difficult.
The flip side of that is there is a great mental and emotional lift when all your debts are eliminated, and youre given a fresh start.
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Attend Your 341 Meeting
Your 341 meeting, or meeting of creditors, will take place about a month after your bankruptcy case is filed. Youâll find the date, time, and location of your 341 meeting on the notice youâll get from the court a few days after filing bankruptcy. Due to the COVID-19 pandemic, all 341 meetings are held either by video conference or via telephone until at least October.
The main purpose of the 341 meeting is for the case trustee to verify your identity and ask you certain standard questions and most last only about 5 minutes. Your creditors are allowed to attend and ask you questions about your financial situation, but they almost never do.
ââ You must bring your government-issued ID and social security card to the meeting. If you donât bring an approved form of both, the trustee canât verify your identity and the meeting cannot go forward. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for. ââ
How Much Will I Have To Pay
The payment a Bankrupt makes into their estate is set by the Bankruptcy and Insolvency Act.
Much like Child Support charges, they are calculated on a sliding scale in proportion to your income threshold.
This is why its so essential to get in touch with a Licensed Insolvency Trustee as soon as you suspect that you may be insolvent.
They can help you to get a clearer picture of your financial situation and make a better informed choice.
Depending on your income or assets, they may advise that another option like a Consumer Proposal may be more beneficial than Bankruptcy.
Calculations are made based on all kinds of income, whether earned in gainful employment or passive.
So rental income from any properties you may own, as well as dividends on any shares, will be treated just the same as income from wages.
Even money received from your Employment Insurance policy or pension will be included in the calculation.
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What About The Pros And Cons Of Filing Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 bankruptcy are both powerful debt relief options for folks in need of a fresh start. But the pros and cons of filing Chapter 13 bankruptcy are quite different than for Chapter 7. If you have a high disposable income or non-exempt assets you want to protect, Chapter 13 may be right for you. Check out this article to find out more about the pros and cons of filing Chapter 13 bankruptcy.