Cover Your Four Walls
When youre making a budget that will work for you right now, where do you start? Whats the main stuff you need to focus on covering? Start with what we call your Four Walls: food, utilities, shelter and transportation. These are the main essentials.
Keep everyone fed, the lights on, a roof over your heads, and gas in the car to get to work. If these Four Walls are only things you can pay for while youre getting out of debt, thats called survival mode, and that may be what you need to jump into right now.
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.
How Much Debt Do You Need To File For Bankruptcy
A lot of people ask the same question when theyre thinking about filing for bankruptcy. The debt is piling up, and theyre feeling increasing pressure because of it. It may not be that huge of an amount, but their ability to pay it back is becoming more and more unlikely.
So they ask themselves if theyre in enough to debt to justify a bankruptcy.
How much debt do you need to file for bankruptcy, anyway? Is there an actual amount?
The answer is actually very simple, but there are some nuances: Bankruptcy laws do not require debtors to have a minimum debt amount in order to file for bankruptcy. When to file bankruptcy and determining if it is the right choice for you ultimately depends on your individual circumstances.
In this post, well cover these circumstances in greater detail and give you a better idea of whether the sum of your debt and the pressure of your circumstances indicate that you should file for bankruptcy.
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British Citizenship Applications And Immigration Status
Being declared bankrupt;could have an impact on your immigration status or any application you’re making for British nationality. You should make sure you understand how it might impact you before you go ahead with a bankruptcy application.
- More about the impact of bankruptcy on applications for British Citizenship or your immigration status
Why So Many Restaurants Are Filing For Bankruptcy
News that Cosí Inc. filed for bankruptcy Wednesday came as no surprise to industry observers. The chain has lost money for years. And lots of chains are taking the debt-protection route these daysIndeed, Cosí was the eighth restaurant company to file for bankruptcy in 10 months. They represent at least 12 chains: Logans Roadhouse, Fox & Hound, Champps, Baileys, Old Country Buffet, HomeTown Buffet, Ryans
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Signs You Should Consider Declaring Bankruptcy
Knowing whether youd be a good candidate to file for bankruptcy can be tricky. Its a major step, and one that shouldnt be taken lightly.
But, for some people, declaring bankruptcy is the only way to get out of serious debt.
The most important thing is to identify what your goal is when filing for bankruptcy, said LynAlise Tannery, a bankruptcy attorney with Bonial & Associates P.C. based in Dallas.
Know what your goal is, she said. Are you trying to file for bankruptcy because you are past due on your house and you dont want to get foreclosed? Or maybe youre current on your house and car, but you had surgery and your insurance didnt cover it, and you have all of these medical bills you cant pay. Try to see what your end goal is when you want to file for bankruptcy, go talk to a debtor bankruptcy attorney about that.
Here are some signs that bankruptcy might be the right solution for you.
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.
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Filing For Bankruptcy Does Cost Money
Despite the fact that most people file for bankruptcy because they can’t make good on their debt payments, for many, the process isn’t free. Most consumers will need to pay filing fees and many hire an attorney to help them through filing process .
Chapter 7 and Chapter 13 cases typically cost between $300 and $350 for filing fees, according to the National Bankruptcy Forum. You may be able to pay the filing fees in installments; most courts will allow it if you can show it would be a financial hardship to pay all at once.
If you hire an attorney, that’s an additional expense. For a Chapter 7, you can expect to spend between $1,500 and $2,000 in legal fees, depending on the complexity of your case, Tadross says. These fees need to be paid before the Chapter 7 is filed in court to avoid any issues with your attorney becoming another creditor.;
For Chapter 13, it’s a bit more expensive, generally around $2,500 to $3,500 for the case. That’s because many Chapter 13 bankruptcies can take up to five years to resolve, and the attorney will need to continue to manage your case. But, in these cases, you usually can pay the attorneys’ fees over time.;
How Do I Declare Bankruptcy
You can go bankrupt in one of two main ways. The more common route is to voluntarily file for bankruptcy. The second way is for creditors to ask the court to order a person bankrupt.
There are several ways to file bankruptcy, each with pros and cons. You may want to consult a lawyer before proceeding so you can figure out the best fit for your circumstances.
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How Often Can I File A Bankruptcy
There are longer waiting periods to file another bankruptcy.
- If you get a Chapter 7 discharge, you must wait eight years from the date of filing the first Chapter 7 before you can get another Chapter 7 discharge.
- If you get a Chapter 7 discharge, you must wait four years from the date of filing that Chapter 7 before you can get a discharge under a Chapter 13.
- If you get a Chapter 13 discharge, you must wait six years from the date of filing that Chapter 13 before you can get a Chapter 7 discharge.
- This waiting period does not apply if:
- You actually paid 70% to 100% of the unsecured debts under the Chapter 13 plan, and
- The court finds your plan was propose in good faith, and
- Your attempt to make payments under the plan was your best effort.
If You Have Property You Don’t Want To Lose
You may have property that you would lose in a Chapter 7 bankruptcy if you file now, but that you could keep if you wait — or at least have time to sell and use the proceeds. For example:
- Tax Refunds. Assume you are expecting a tax refund of $4,000. You would have to surrender it to the bankruptcy trustee if you receive it after you file. However, if you first get your tax refund, spend it over a few months on necessities, and then file for bankruptcy, you would have the full benefit of the refund.
- Property Exceeding the Exemption Maximum. Assume you have assets that are worth more than the amount you’re allowed to keep in bankruptcy through “property exemptions.” If you wait a few months to file, the property could sufficiently depreciate in value to fall within a property exemption. For instance, say you own a car worth $6,000 but your state exemption laws allow you to keep a car with a value only up to $5,500. If you wait a few months, the car’s value could drop by enough to bring it within the exemption.
- Nonexempt Assets. Assume that you have assets that aren’t exempt — that is, the bankruptcy trustee can take the property and sell it to pay off your creditors. If you sell the property for its fair market value before you file for bankruptcy, and then spend the proceeds on necessities, you, rather than your creditors, would benefit from the property.
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You Can Keep Some Propertybut Maybe Not All Of It
In addition to the loss of collateral property that secures a loan, you can keep or lose property depending on its status as “exempt” or “non-exempt” property. When you file for bankruptcy, you can keep a certain amount of exempt property, such as the equity in your home. However, property that isn’t exempt can be sold by the bankruptcy trustee to pay off some or all your creditors.
The type of bankruptcy you choose also matters for purposes of determining what property you can keep. If you file for a Chapter 7 bankruptcy, you risk losing your non-exempt property to pay off your debts. If you file under Chapter 13 instead, you can keep all of your property, but you’ll have to repay your creditors the value of any non-exempt property through a repayment plan that is administered by a trustee.
Every state has its own specific bankruptcy exemptions, so be sure to check the ones where you live. For example, in Virginia, you can exempt $5,000 plus $500 per dependent for residential property or personal property. If you’re over 65 or a disabled veteran, that exemption goes up to $10,000. Starting in July 2020, Virginians will be able to exempt an additional $25,000 of real or personal property used as a principal residence.
The Bankruptcy Filing Process
There are a number of legally required steps involved in filing for bankruptcy. Failing to complete them can result in the dismissal of your case.
Before filing for bankruptcy, individuals are required to complete a credit counseling session and obtain a certificate to file with their bankruptcy petition. The counselor should review your personal situation, offer advice on budgeting and debt management, and discuss alternatives to bankruptcy. You can find the names of government-approved credit counseling agencies in your area by calling the federal bankruptcy court closest to you or by visiting its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial statements showing your income, debts, and assets. You will also be required to submit a means test form, which determines whether your income is low enough for you to qualify for Chapter 7. If it isnt, you will have to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is sometimes waived if you can prove you cant afford it.
You can obtain the forms you need from the bankruptcy court. If you engage the services of a bankruptcy lawyer, which is usually a good idea, they should also be able to provide them.
Assuming the court decides in your favor, your debts will be discharged, in the case of Chapter 7. In Chapter 13, a repayment plan will be approved. Having debt discharged means that the creditor can no longer attempt to collect it from you.
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What Papers Do I Have To File With My Bankruptcy
The bankruptcy petition requires you to list all of your current income, any increase in income expected in the next 12 months, all of your expenses, all of your property, all of your debts, and all of your creditors. You must list the name and address of each creditor, the name and address of the attorney for each creditor, the name and address of each debt collection agency, and the name and address of the attorney for each debt collection agency. You also must file the following papers with your bankruptcy:
If you dont file these papers on time as required by the court, your bankruptcy will be dismissed.
When To File Chapter 7 And Chapter 13 Bankruptcy
Bankruptcy is a viable option for you no matter how high or low your debts are. Although the bankruptcy court does not have an outline regarding the minimum debt threshold, there are certain requirements that you need to meet in order to qualify.
- Filing history requirements: If you have filed and been discharged from a bankruptcy in the past, you may not be eligible to file for another bankruptcy discharge until a certain amount time has elapsed. The number of years depends on the type of bankruptcy you chose or the circumstances of your previous dismissal.
- Income requirements: To qualify for Chapter 7 bankruptcy, you need to pass the Chapter 7 Means Test wherein your income will be compared to the income of other families of your size within your state. This test allows the bankruptcy court to determine whether you have the capacity to pay off your debts.
- Other acceptable debt requirements: It is important to note that only certain types of debts can be discharged under this type of bankruptcy. Unsecured debts such as payday loans and credit card debts can be discharged in bankruptcy. ;You can also discharge the debts from a car or home that you dont wish to keep if you are underwater. If you are behind on either a mortgage or car loan, then you can catch up on those payments via a Chapter 13 bankruptcy.
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Should I File Chapter 7 Bankruptcy Right Now
Some signs that you may be a good fit for filing bankruptcy now:
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You have more than $10,000 of dischargeable debt
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Your credit score is already low
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You donât own expensive property
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Keeping up with payments is making it impossible to make ends meet every month
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Youâre worried about wage garnishment or being sued for your debt
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You pass the means test because you earn under the median income in your state
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You donât see a way of being able to pay back your debt over the next 5 years
If these apply, right now may be the right time to file for bankruptcy.
How Long Does Chapter 7 Bankruptcy Take
Most people can file their bankruptcy forms within one week if theyâre organized. The 341 meeting with the trustee who oversees your case takes place about one to two months after you file.
If all goes well, two to three months after your meeting with your trustee, youâll get a letter in the mail that your debt is officially discharged. This means that that Chapter 7 bankruptcy from beginning to a discharge of your debts takes about 3-5 months.
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Does Bankruptcy Affect My Credit
Having a bankruptcy on your credit report will have a negative impact on your credit. A bankruptcy will make it harder to get loans or credit in the future, and your rates will be higher. How long a bankruptcy stays on your credit report depends on the type of bankruptcy you file.
Chapter 7 bankruptcy can stay on your credit reports for 10 years, while Chapter 13 bankruptcy only stays on your reports for seven years. However, the impact on your credit score will lessen over time. For example, a bankruptcy filed last year will have a greater impact than a bankruptcy filed five years ago.
You Have Bills In Collections That You Cannot Pay Off
If a medical procedure put you in significant debt and youve already exhausted all your other options for paying it back, you might want to consider filing for bankruptcy.
Or if youve racked up significant credit card debt and other methods for paying it back have failed, bankruptcy might be right for you.
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