What Is The Best Way To Protect My Property During Bankruptcy
In Arkansas, you can use either federal or state exemptions. Our Arkansas bankruptcy attorneys will help you best determine which exemptions apply to your situation, and we can help you fill out your petition. It is important to us that you keep everything you have, so we make sure your petition is accurate and detailed. If we believe any of your assets are at risk, we will discuss this before we file your petition.
Keep Track Of Your Credit During The Process
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.
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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.
Am I Ready To File For Bankruptcy
Before you run to the nearest courthouse, you need to be 100% sure bankruptcy is the right choice for your financial situation. Many people panic and file as soon as the debt collectors start calling. But bankruptcy is rarely your only option.
Listen, were not saying youre a bad person if you file for bankruptcy. Lots of good people end up in tough situations. But bankruptcy isnt pretty. Its a gut-wrenching experience that lays out your money problems for all to see and drags you through the legal mud. You might as well put it in the same category as divorceyou should do everything in your power to avoid bankruptcy.
If youre deep in debt, the first thing you need to do is get aggressive about paying it off. Were talking yard sales, second jobs, major lifestyle changes, and a good budget. So, dont even think about bankruptcy until youve tried every other possible route first.
If youre at the point where youre filing for bankruptcy, it really should be your last resort.
Make Sure You Have Your Filing Fee
Bankruptcy isnt cheap. On top of attorney fees, you also have to pay a fee just to file for bankruptcy. The filing fee for a Chapter 7 bankruptcy is $335, and for a Chapter 13, its $310.2,3 Youll have to pay this amount in exact change to the court in person. If you dont have the money to cover the filing fee, you can ask for a payment plan to space out your fee . Or, if money is really tight, you can submit a form asking for the fee to be waived.
Plenty Of Debtors Ask This Question But Bankruptcy Fees Are The Same Across The United States
OK, it was a trick question: Although many people are looking for the cheapest place to file for bankruptcy, the filing fees are the same no matter where you file.
- You’ll file in the bankruptcy court located closest to where you live.
- If you can’t afford the fee, you can apply for a fee waiver or ask to pay in installments.
- The filing fee is $338 for Chapter 7 and $313 for Chapter 13.
Read on for information about where to file and how to pay. You can also learn about timing your bankruptcy filing.
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The Six Forms Of Bankruptcy
There are six different types of bankruptcy in the U.S. Each form is designed for a specific purpose and has its own positives and negatives.
- Chapter 7 allows you to discharge most of your debt after selling off some of your property to repay creditors. Chapter 7 is also for businesses that need to close their doors because of financial challenges.
- Chapter 13 keeps your property and puts into place a repayment plan with more reasonable payments to allow you to pay off as much debt as you can within three to five years.
- Chapter 11 is for businesses that wish to shed debt and cut costs through business reorganization.
- Chapter 9 is for cities, counties, school districts, and municipalities in debt.
- Chapter 12 is for family farmers and fishing businesses facing debt.
- Chapter 15 is for foreign cases .
Most people will bankruptcy, while businesses will choose between Chapter 7 and Chapter 11.
The type of bankruptcy you can file will depend on your assets, earning capacity, total debt, and several other factors. The choice is not always up to you, but your attorney and bankruptcy trustee can advise you.
How Does Chapter 11 Work
The U.S. Trustee, the bankruptcy arm of the Justice Department, will appoint one or more committees to represent the interests of creditors and stockholders in working with the company to develop a plan of reorganization to get out of debt. The plan must be accepted by the creditors, bondholders, and stockholders, and confirmed by the court. However, even if creditors or stockholders vote to reject the plan, the court can disregard the vote and still confirm the plan if it finds that the plan treats creditors and stockholders fairly. Once the plan is confirmed, another more detailed report must be filed with the SEC on Form 8-K. This report must contain a summary of the plan, but sometimes a copy of the complete plan is attached.
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The Bankruptcy Process 101
You should first consider if debt relief options can help you or if bankruptcy is your best option. You can have a free consultation with a bankruptcy attorney to help you decide.
The process will require paperwork, finding documents, meeting with your trustee, and various court appointments. It generally takes two to six months from the day you start the paperwork to your last court appointment.
The court issues a protective order when you file for bankruptcy called an “automatic stay.” This stops most creditors from contacting you about your debts or making any collection efforts. Only the court has the authority to lift the automatic stay and allow creditors to seek repayment of debts.
Though it takes time, the bankruptcy process will resolve your debt crisis and help you start over financially.
How Do You File Chapter 7 Bankruptcy
You can probably complete the process within six months. You’ll have to follow several steps.
You must complete pre-file bankruptcy counseling from a qualified nonprofit credit counseling agency within 180 days before filing.
Find an attorney:Before diving into the various forms required to file Chapter 7, find a qualified bankruptcy attorney to help. Its hard to find money for a lawyer when you need debt relief, but this is not a DIY situation. Missing or improperly completed paperwork can lead to your case being thrown out or not having some debts dismissed.
File paperwork: Your attorney will help with filing your petition and other paperwork. But its on you to gather all relevant documentation of your assets, income and debts. An automatic stay goes into effect at this point, meaning that most creditors cannot sue you, garnish your wages or contact you for payment.
Trustee takes over: Once your petition is filed, a court-appointed bankruptcy trustee will begin managing the process.
Meeting of creditors: The trustee will arrange a meeting between you, your lawyer and your creditors. Youll have to answer questions from the trustee and creditors about your bankruptcy forms and finances.
Your eligibility is determined: After reviewing your paperwork, the trustee will confirm whether youre eligible for Chapter 7.
Education course: Before your case is discharged, youll have to take a financial education course from a qualified nonprofit credit counseling agency.
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Objections To Proof Of Claim
The bankruptcy court approves most proofs of claim. But in some cases, the debtor, trustee, or another party can object to your claim before a judge grants that approval. Here are some common reasons that may apply:
- If the claim amount is incorrect
- If the claim indicates a debt is secured when it is not
- If the creditor fails to provide any supporting documentation
Any objections must be received in writing by the bankruptcy court, with a copy served to the creditor at least 30 days before a hearing.
What Is The Role Of The Us Securities & Exchange Commission In Chapter 11 Bankruptcies
Generally, the SEC’s role is limited. The SEC will:
- review the disclosure document to determine if the company is telling investors and creditors the important information they need to know and
- ensure that stockholders are represented by an official committee, if appropriate.
Although the SEC does not negotiate the economic terms of reorganization plans, we may take a position on important legal issues that will affect the rights of public investors in other bankruptcy cases as well. For example, the SEC may step in if we believe that the company’s officers and directors are using the bankruptcy laws to shield themselves from lawsuits for securities fraud.
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When Is A Bankrupt Discharged
There will be an automatic bankruptcy discharge for a first-time bankrupt nine months after they became bankrupt unless the trustee recommends a discharge with conditions or it is opposed by either a creditor, the trustee or the Superintendent of Bankruptcy. In addition, if you have surplus income of more than $200 per month, your bankruptcy will be extended to 21 months in the case of a first bankruptcy.
Filing For Chapter 7 Bankruptcy
There are lots of reasons people file for Chapter 7 bankruptcy. You’re probably not the only one, whatever your reason is. Some common reasons for filing for bankruptcy are unemployment, large medical expenses, seriously overextended credit, and marital problems. Chapter 7 is sometimes referred to as a “straight bankruptcy.” A Chapter 7 bankruptcy liquidates your assets to pay off as much of your debt as possible. The cash from your assets is distributed to creditors like banks and credit card companies.
Within four months, you will receive a notice of discharge. The record of your bankruptcy will stay on your credit report for ten years. But even that doesn’t have to mean doom. Lots of Chapter 7 filers have bought homes with recent bankruptcies on their record. For many people, Chapter 7 offers a quick, fresh start.
But Chapter 7 bankruptcies aren’t right for everyone. Almost all assets are taken and sold to repay creditors. If a debtor owns a company, a family home, or any other personal assets which he or she wants to keep, Chapter 7 may not be the best option.
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Filing For Bankruptcy Close To Home
For most people, the correct filing place is close to homethe federal district in which you have lived for the 180 days immediately before filing . However, some districts cover large areas so the bankruptcy court might not be as close to your home as you’d like.
Most large districts have multiple locationssome of which accept bankruptcy filings, but not all. You can call your bankruptcy court or visit the court’s website using the instructions in “Finding the Bankruptcy Court” above, to find a closer satellite location.
Why Would A Company Choose Chapter 11
“Prepackaged Bankruptcy Plans”
Sometimes companies prepare a reorganization plan that is negotiated and voted on by creditors and stockholders before they actually file for bankruptcy. This shortens and simplifies the process, saving the company money. For example, Resorts International and TWA used this method.
If prepackaged plans involve an offer to sell a security, they may have to be registered with the SEC. You will get a prospectus and a ballot, and it’s important to vote if you want to have any impact on the process. Under the Bankruptcy Code, two-thirds of the stockholders who vote must accept the plan before it can be implemented, and dissenters will have to go along with the majority.
Most publicly-held companies will file under Chapter 11 rather than Chapter 7 because they can still run their business and control the bankruptcy process. Chapter 11 provides a process for rehabilitating the company’s faltering business. Sometimes the company successfully works out a plan to return to profitability sometimes, in the end, it liquidates. Under a Chapter 11 reorganization, a company usually keeps doing business and its stock and bonds may continue to trade in our securities markets. Since they still trade, the company must continue to file SEC reports with information about significant developments. For example, when a company declares bankruptcy, or has other significant corporate changes, they must report it within 15 days on the SEC’s Form 8-K.
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Where Your Business Is Located
When most of your debts are from running your business, it makes sense to file where your business is located. For example, if you own a yogurt store in Provo, Utah and your primary creditors are the frozen yogurt mix supplier, the paper cup distributor, and local radio station, your creditors might claim that your home state of Nevada is an inconvenient location.
Find out why someone with primarily business debts doesn’t need to take the means test.
Preparing For Chapter 7 Bankruptcy
Theres some protocol to follow in the months before filing for bankruptcy. Failing to follow these instructions could undermine your efforts.
Dont Pay Creditors It seems counterintuitive and you should definitely make routine payments. But any large or unusual payments could be viewed as preferential transfers. That means one creditor has benefited unfairly over others.
No New Debt A new creditor could claim you took out a loan or ran up the balance on a credit card without intending to pay it back. Legally, thats fraud and it will not be forgiven.
No Unusual Transactions Dont stray from the routine. Dont transfer titles of cars or homes. Dont buy luxury goods. Dont transfer your business or remove your name from it. They can all be classified as fraud.
Be Truthful You are required, while filing for bankruptcy, to provide full and complete information. You must disclose any debt, assets, accounts or other financial information. Failure to comply could lead to fraud and potential criminal charges.
Dont Touch Retirement Funds You are generally allowed to keep retirement plans and accounts, so keep them safe while considering bankruptcy and dont use those funds to pay down debt.
Never think you can get away with something sneaky or dishonest. Your bankruptcy lawyer is always a good resource for what you should and shouldnt do.
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Chapter 7 Bankruptcy Procedures
The Chapter 7 bankruptcy debtor is required to list all liabilities, no matter how remote. The Petition should list any claim that anyone might have against the debtor even if the claim has not yet matured. For example, if the bankruptcy debtor is a co-debtor on a note, has personally guaranteed corporate or other debt, or is secondarily liable on a mortgage that has been assumed by a purchaser, the debt should be listed along with a brief explanation of the liability. Disputed debts and liabilities should also be listed. Also, if the debtor has ever had a home mortgage that was insured by a government agency , the Petition must list that agency as a contingent creditor. This should be done even when someone purchased the property and assumed the mortgage since they might default, and the VA could decide to pursue a claim against the debtor.
The first step in the Chapter 7 bankruptcy is the filing of the petition. The filing of a Chapter 7 bankruptcy creates a bankruptcy estate. The bankruptcy estate refers to all of the debtors non-exempt property that is subject to administration by a bankruptcy trustee. A trustee is randomly appointed by the Court immediately upon the filing of a Chapter 7 Petition. The Chapter 7 trustee is usually a private attorney or CPA. The trustees job in Chapter 7 bankruptcy is to gather all of the debtors non-exempt assets, sell those assets , and distribute the proceeds among the debtors scheduled unsecured creditors.
Help If I File Bankruptcy What Happens To My House
There may come a time that you struggle with money, and when youre in over your head in debt, you need to consider your best options. One way to deal with unmanageable debt is to file bankruptcy. But wait! What about your house? If youre wondering, Can I keep my house if I file bankruptcy? The answer to that depends on the type of bankruptcy that you file: Chapter 7 or Chapter 13. Let us help you with this guide.
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Where Will I Live If I Lose My Home Through Bankruptcy
Stop worrying and asking, Will I lose my house if I file bankruptcy? Even if you do, all hope is not lost! You can still have a new home even after bankruptcy.
Some programs are available to help you on your road to recovery. State governments and nonprofits have home-buying assistance programs that you can tap into. These include the following:
- Federal Housing Administration loans
- Veteran Affairs loans
- United States Department of Agriculture loans
- State housing finance agencies