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Which Bankruptcy Chapter Is Right For Me

Finding A Good Bankruptcy Lawyer

Bankruptcy 101 – What Is Bankruptcy and Is It Right For Me? – RI Lawyer

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Getting a lawyer to help you with your bankruptcy. Bankruptcy is a specialized area of law that is very complex. And the issues are not always apparent or;

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legal services including Bankruptcy and Chapter 7 & 13 Bankruptcy cases. In addition, most of our clients find that they are able to rebuild their;

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May 13, 2021 If your income is higher, you will find a bankruptcy lawyer on your own. You can do an online search for bankruptcy attorney in your area.

A bankruptcy lawyer can guide you in the best timing for your bankruptcy filing. Hiring a Personal Bankruptcy Attorney. The steps to finding a bankruptcy;

How To Prevent Bankruptcy

Bankruptcy is generally a last resort, for businesses and individuals alike. Chapter 7 will, in effect, put a business out of business, while Chapter 11 may make lenders wary of dealing with the company after it emerges from bankruptcy. A Chapter 7 bankruptcy will remain on an individuals credit report for 10 years, a Chapter 13 for seven.

While bankruptcy may be unavoidable in many instances , one key to preventing it is borrowing judiciously. For a business, that could mean not using debt to expand too rapidly. For an individual, it might mean paying off their credit card balances every month and not buying a larger home or costlier car than they can safely afford.

Before filing for bankruptcy, and depending on their own internal legal resources, businesses may want to consult with an outside attorney who specializes in bankruptcy law and discuss any alternatives that are available to them.

Individuals are required by law to take an approved credit-counseling course before they file. Individuals also have other resources available to them, such as a reputable debt relief company, which can help them negotiate with their creditors. Investopedia publishes an annual list of the best debt relief companies.

Will Filing For Bankruptcy Hurt My Credit Score

Many people assume that filing for bankruptcy will hurt their credit. In most cases, thats simply not true. Will a bankruptcy go on your credit report? Yes. But was your credit good before you filed for bankruptcy? It probably wasnt. In most cases, filing for bankruptcy neither hurts nor helps your credit score.

That being said, once your bankruptcy is complete, you can take immediate steps to rebuild your credit score to the rating you want it to be. Programs like our 7 Steps to a 720 which is free for our clients teach you exactly how to make it happen.

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How Does Filing Bankruptcy Impact Credit

Your credit may not be in tip-top shape by the time you consider filing for bankruptcy, since high balances and missed payments are the top factors affecting your credit score. Still, the presence of a bankruptcy on your credit report will severely impact your credit scores and creditworthiness the entire time it is on your report. That impact will lessen as time passes, however. Chapter 7 bankruptcy remains on your report for up to 10 years, and Chapter 13 stays there for up to seven years.

It’s not an ideal credit situation, of course, but you can use the time to manage your debts wisely and make consistent on-time payments. Like with any damage to your creditworthiness, it’s possible to rebuild your credit with some focus and patiencealong with using the debt relief provided by the bankruptcy to get back on track financially.

How Do I Apply For Bankruptcy

Which bankruptcy chapter is right for me?

The unfortunate reality of bankruptcy is that it will cost some moneymore if you hire legal help, which you probably should . All filings have to go through U.S. bankruptcy courts, where the cost to file is $335 for Chapter 7 and $310 for Chapter 13. However, you can ask the court to either waive your fee or let you pay with monthly installments. You’ll also have to take debtor education courses if you file on your own.

And that’s just the beginning. There’s a list of documents you’ll need to take care of, as well as the specific repayment proposal you need to submit for Chapter 13. That proposal gets reviewed by a court-appointed trustee, who contacts your creditors before approving your submission. Overall, neither filing is an easy process to handle on your own, and even minor mistakes on your end could be a setback for your case.

So, whether you file for Chapter 7 or Chapter 13 bankruptcy, it’s typically a good idea to hire a lawyer to help you petition. A bankruptcy attorney’s price depends on the nature and complexity of your filing, with Chapter 13 filings on the pricier end, but the price tag doesn’t necessarily mean a lawyer is out of the question for you. Discuss payment plans with potential attorneys, check out local pro-bono lawyers and legal aid offices, or use an online tool like Upsolve to cover your bases when it comes to bankruptcy.

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Chapter 7 Vs Chapter 13 Bankruptcy

The main difference between Chapter 7 and Chapter 13 bankruptcy is that in Chapter 13 bankruptcy, you don’t immediately erase any debts. You propose a repayment plan based on your ability to repay certain debts. The bankruptcy trustee and all creditors review the Chapter 13 plan and, if itâs acceptable to all involved, the court confirms your repayment plan, which lasts three to five years.

Most people file Chapter 13 bankruptcy instead of Chapter 7 for two reasons. First, they fail the means test due to their high income and donât qualify for Chapter 7 bankruptcy. Second, they own a home they want to keep thatâs not covered by the Chapter 7 bankruptcy exemptions.

If you’re considering filing Chapter 13 because you don’t pass the means test, look at the reasons you aren’t passing. The lookback period for the means test is 6 months, so if you recently experienced a drop in household income, you might qualify for Chapter 7 in the near future.

The Different Bankruptcy Chapters

There are several different chapters in the United States Bankruptcy Code which allow for different types of debt relief for different types of individuals and entities.

The bankruptcy chapters, as they currently exist, are 7, 9, 11, 12, 13, and 15.

No, thats not a fibonacci sequence, those are the actual chapter numbers in Title 11, United States Code.

The primary chapters on which this page will focus are

  • Chapter 7: Sometimes called a personal bankruptcy case.
  • Chapter 11: Corporate and Individual Reorganization
  • Chapter 13: Individual/Business Reorganization

More on these below, but just for your information, here is what the other Chapters are for:

  • Chapter 9: Municipality Debt Reorganization
  • Chapter 12: Family Farmer or Fisherman Debt Reorganization
  • Chapter 15:; For Ancillary and Cross-Border Cases.; In short, it is for recognizing a foreign bankruptcy proceeding in the United States.

But for most of you visiting this page, Chapters 7, 11, and 13 will be the options from which you will need to choose.

This page provides a basic roadmap to help in making your determination on where to at least look to determine if you need to file bankruptcy and, if so, under which bankruptcy chapter.; More details on each Chapter can be found through the links below to my pages on each individual Chapter.

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How To Find A Bankruptcy Attorney Debtorg

Ask neighbors. Ask friends and relatives. Perhaps there are lawyers on your homeowners association board. There surely;How To Choose A Bankruptcy Lawyer · What Should You Ask a Bankruptcy Lawyer?

Knowing someone who had a good experience with a bankruptcy lawyer is often your best source. Call that lawyer first. Your lawyer might know a good bankruptcy;

Nov 25, 2020 Bottom line. There are many ways to find an attorney to represent you if youre filing for bankruptcy. If you can get a referral from someone;Finding a bankruptcy attorney · Benefits of working with a bankruptcy lawyer

Things To Consider Before Filing For Bankruptcy

How Do I Know if Bankruptcy Is the Right Thing For Me?

There are other debt-relief solutions than bankruptcy available for people who are struggling financially, but have enough resources to right the ship.

Calling a counselor from a nonprofit credit counseling agency is a good first step. They offer a free counseling service that looks at your finances and discusses the pros and cons of a debt management program, a debt consolidation loan or even debt settlement, any of which might help guide you back to safe ground.

Another step in the right direction would be to get serious about creating and living within a budget. You could supplement your current income with things like taking a second job or trying to sell some assets to pay bills.

Other things to consider before making a final decision: Did I try to negotiate the debt down to manageable numbers? Is my current status permanent or is the situation expected to improve soon?

A final consideration: Do I have a big bill or series of big bills coming due soon? You might want to hold off on paying that until you decide whether or not to file bankruptcy since those bills could be dismissed through bankruptcy.

Here are some other questions you need to answer before making a decision on whether you want to file bankruptcy.

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When Chapter 13 Might Meet Your Needs

Chapter 7 bankruptcy isn’t the best choice for everyone. Chapter 7 won’t help people whose debts won’t get wiped out , like certain income tax debt, student loans, and domestic support obligations. High-income filers find it hard to qualify. It’s also not a good fit for people who would lose substantial equity in a home or other property if they filed for Chapter 7 bankruptcy, or those facing foreclosure or repossession. For those individuals, Chapter 13 bankruptcy would likely be a better choice.

Chapter 13 Bankruptcy Are You Eligible

Chapter 13 bankruptcy has a number of eligibility requirements.

Your debts must not be too high

You will not qualify for Chapter 13 bankruptcy if your secured debts exceed $750,000. A debt is secured if you stand to lose specific property if you dont make your payments to the creditor. Home loans and car loans are common examples of secured debts. But a debt might also be secured if a creditor such as the IRS has filed a lien on your property.

In addition, your unsecured debts cannot exceed $250,000. An unsecured debt is any debt for which you havent pledged collateral. Most debts are unsecured, including credit cards, medical bills, student loans and department store charges.

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You must have stable and regular income

This doesnt mean you must earn the same amount every month. But the income must be steady likely to continue and periodic weekly, monthly, quarterly, semi-annually or seasonally.

You must have disposable income

Your income must be high enough so that after you pay for your basic needs, you will have money left over to make periodic payments to the trustee. To determine if your disposable income is high enough, you must create a monthly budget. If the trustee or a creditor thinks your budget includes expenses other than necessities, it may be challenged.

Talk to a Bankruptcy Attorney

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How Do I Know If I Qualify For Chapter 7

To qualify for Chapter 7, the person filing must pass a bankruptcy means test. A means test;determines how much disposable income you have available. If your income is lower than the states median income for a family the same size as yours, you automatically pass the means test. If your income is over the state median, youll get another chance to pass by subtracting your expenses.

Dont worry: if you dont qualify for Chapter 7, youre not out of options. You can file for a Chapter 13 bankruptcy to repay your debt over time. An experienced TN Chapter 7 bankruptcy lawyer can help you decide which bankruptcy chapter is best for you.

Will I Have To Go To Court

When to File Chapter 7 Bankruptcy?

In most bankruptcy cases, your only personal contact with the bankruptcy process is an appearance at a proceeding called the meeting of creditors to meet with the bankruptcy trustee and any creditor who elects to participate in your bankruptcy. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. To find the location of the court that serves your area visit the Indiana Federal Bankruptcy Court Directory page.

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What Are The Advantages Of Chapter 7 Bankruptcy

Most people prefer this Chapter to get quickly get out of debt. Here are some of its benefits:

A quick process once you file for Chapter 7 bankruptcy in Tennessee, it will typically take about 3-6 months to complete.;

Many debts are erased not all, but many debts will be wiped out and leave the person with particular debts like recent taxes, student loans, and unpaid child support.;

No payment plan the filer emerges debt-free and isnt bound by a payment plan, as is the case of Chapter 13 bankruptcy which can have a three to five repayment plan.

You keep your car or home in some situations as long as you are current on payment and can continue making payments even after your bankruptcy case, you can keep your home or car.;

Protection of property while you may lose property in Chapter 7, you still get to keep most of your necessities.;

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 Should File For Chapter 7 Bankruptcy

Chapter 7 works very well for many people, especially those who:

  • own little property
  • have credit card balances, medical bills, and personal loans , and
  • whose family income doesn’t exceed the state median for the same family size.

You’ll take the means test to see if your income qualifies for this chapter. If your income is below the average income for a family of the same size in your state, you’ll automatically qualify.

If your income is higher than the median, you’ll have another opportunity to pass. However, if after subtracting allowed expenses, including payments for child support, tax debts, secured debts , you have income left over to make a significant payment to your creditors , you won’t qualify to file for Chapter 7 bankruptcy.

The Advantages Of Chapter 13 Bankruptcy:

Is Chapter 7 Bankruptcy Right for You? Bankruptcy Law Attorney
  • Keep the assets that matter most to you and your family
  • Most debts are eligible to be discharged
  • Have up to five years to pay off your debts
  • Unique ability to remove a second mortgage;
  • Cramdown an older car or investment property loan to the present value of the asset
  • Stop accruing interest immediately

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Chapter 7 Bankruptcy When It Might Not Help

Filing for Chapter 7 bankruptcy is only one way to solve debt problems. In several situations, Chapter 7 bankruptcy may not be the right choice.

You previously received a bankruptcy discharge

You cannot file for Chapter 7 bankruptcy if you obtained a discharge of your debts under Chapter 7 or Chapter 13 in a case begun within the past six years.

A previous bankruptcy case was dismissed

You cannot file for Chapter 7 bankruptcy if a previous Chapter 7 or Chapter 13 case was dismissed within the past 180 days because you violated a court order or requested the dismissal after a creditor asked for relief from the automatic stay.

A friend or relative cosigned a loan

Anyone who cosigned a loan or otherwise took on a joint obligation with you can be held wholly responsible for the debt if you file for Chapter 7 bankruptcy.

Repayment through Chapter 13

A bankruptcy judge who decides you have enough assets or income to repay your debts can dismiss your Chapter 7 bankruptcy case or convert it to a Chapter 13 bankruptcy.

You defrauded your creditors

You recently incurred debts for luxuries

If youve recently run up large debts for a vacation, hobby or entertainment, filing for bankruptcy probably wont help you. Most luxury debts incurred just before filing are not dischargeable if the creditor objects.

You expect debts for necessities

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