How Long Does The Chapter 13 Bankruptcy Process Take
From the time you initiate the process, youll typically have an answer regarding your approval within about three months. This is another benefit of filing Chapter 13 bankruptcy vs. Chapter 7, because the Chapter 7 process can take twice as long. But once the court aspect of bankruptcy is complete, youll make payments toward your debts for the following three to five years before youre discharged.
Chapter 13s Automatic Stay Can Give You And Your Family Peace Of Mind
Bankruptcy courts automatic stay can relieve you of this invasive and ongoing communication. According to the U.S. Courts, the automatic stay stops most collection activity. This form of relief is imposed by the court and has the added benefit of emotional relief.
While the automatic stay is in place, your creditors cannot:
- Start or continue debt collection lawsuits
- Start or continue to garnish your wages
- Contact you with demands for payment
- Proceed with vehicle repossession or home foreclosure
You do not have to understand the way it works or put it into place on your own. The lawyer who represents you will explain how and when the automatic stay goes into effect. He will also explain the legal actions you can take if your creditors violate the restrictions of the automatic stay.
When To File For Bankruptcy In Greensboro Nc
Our Ivey McClellan bankruptcy attorneys generally advise our Greensboro, NC clients wishing to file Chapter 7 bankruptcy to hold off on doing so if they anticipate incurring substantial bills soon. Our legal team also generally warns our Chapter 13 bankruptcy clients to do the same as theres no guarantee that they will be able to add missed creditors to their bankruptcy filing once certain deadlines have passed. However, there are some instances that may warrant you moving ahead with your bankruptcy filing.
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Filing Bankruptcy Cases Under Different Chapters
If youre filing under a different chapter the second time around, the following rules apply:
- Chapter 7 after Chapter 13 According to Title 11 Section §727 of the U.S. Code, if your first filing was under Chapter 13, you will not be granted a discharge under a Chapter 7 until at least six years has passed from the date you filed your Chapter 13.
- Chapter 13 after Chapter 7 According to Title 11 Section §1328 of the U.S. Code, if your first case was a Chapter 7, you only have to wait four years before filing a Chapter 13.
Filing for Bankruptcy for Reasons other than Discharge
Keep in mind that the time limits discussed only pertain to discharges, not to filings. There is no limit to amount of times you can actually file. While seeking a discharge of debts is the most common reason to file for bankruptcy, its not the only reason.
Some file for the automatic stay which prevents creditors from collecting on debts. Depending on your circumstances, this could help you stop collection efforts and catch up on your payments.
Running into Difficulties with Repeat Bankruptcy Filings
There may be no legal limit on how many times you can file for bankruptcy in Texas but the courts will take a good look at why the debtor is filing for a subsequent bankruptcy. First, lets review why bankruptcies were written into American law.
Discuss Your Options with a Bankruptcy Attorney
After Receiving A Discharge In A Chapter 7 Bankruptcy:
- Before filing another Chapter 7: You must wait exactly 8 years from the date of your previous filing. If you did try to file before that date, the filing would not receive a discharge and you would receive no protection from collections.
- Before filing a Chapter 13: You must wait for exactly four years from the date of your previous Chapter 7 filing prior to filing for relief under Chapter 13. Filings made before four years have passed will not result in a discharge.
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Who Can File For Chapter 13 Bankruptcy
A debtor must meet Chapter 13 requirements to file for bankruptcy under this chapter. Unlike a Chapter 7 bankruptcy, which allows the debtor to discharge some debts in exchange for the sale of nonexempt property to pay creditors, Chapter 13 allows the debtor to keep their property and repay creditors in a three- or five-year court-approved repayment plan.
Chapter 13 Bankruptcy Allows Repayment Over A Period Of Time
When a person faces bankruptcy because of personal debts, the two main options are Chapter 7 and Chapter 13. The difference between the two is the liquidation of assets to settle the debts versus a payment plan to pay the debts .
Approximately 20 percent of all consumer bankruptcy filings fall under Chapter 13. Known as wage earner’s bankruptcy, Chapter 13 allows a debtor with a steady income to pay all or part of the debts over a period of time, usually three years but as long as five. It is usually filed by people who are past due in the home mortgage or car payments.
To qualify for Chapter 13, the debtor must have less than $250,000 in unsecured debt and less than $750,000 in secured debts . A person with debts greater than these must file under Chapter 7 or, in some cases, Chapter 11.
When filing under Chapter 13, the debtor submits to the bankruptcy court a proposed payment plan that applies all of his or her disposable income to paying the creditors. Disposable income is the monies available after the expenses of shelter, food, and other necessities are met.
The plan is usually sent to the person’s creditors for review. If they find the plan acceptable and the court approves the plan, it becomes effective. Normally, the debtor sends a set monthly amount to a court-appointed trustee who distributes it to the creditors. This is usually accomplished by the debtor’s employer’s withholding the payment and forwarding it to the trustee.
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The Chapter 13 Process
First, find a bankruptcy lawyer who will give you a free evaluation and estimate on what youll have to pay to file.
The cost to file Chapter 13 bankruptcy consists of a $313 filing fee and fees charged by a bankruptcy attorney. As for documents and other information, you must provide:
- A list of creditors and the amount of their claims.
- Proof of income.
- List any properties you own and any leases in your name.
- List your monthly living expenses.
- Provide tax information, specifically your federal tax return and any statements of unpaid taxes.
Chapter 13 petitioners cannot have had a bankruptcy petition dismissed in the 180 days before filing. They must also take a course approved by the U.S. Department of Justice U.S. Trustee Program in that 180-day span.
After you file your paperwork, youll then get a letter from the court clerk notifying you, your creditors and your court-appointed trustee that collection activities on your accounts have been suspended. That means creditors have to stop hounding you for payments.
You will propose a repayment plan, and a bankruptcy judge or administrator will hold a hearing to determine whether its fair and meets legal standards. Creditors can object, but most judges allow filers to alter their plans several times.
After that, its just a matter of sticking to your repayment plan. If youre late or miss payments, the trustee could move to dismiss your Chapter 13 case. You dont want that.
Different Types Of Bankruptcy Explained
A Chapter 7 bankruptcy eliminates most debt, including credit card debt, without requiring repayment of any kind. Instead of a repayment plan, the Chapter 7 bankruptcy process liquidates your non-exempt assets to partially repay your debts. A Chapter 13 bankruptcy allows you to keep all of your property as long as the monthly repayment plan pays for the value of your assets. The debts that donât get paid as part of the repayment plan are discharged once the plan has been completed. The discharge of your debts gives you the fresh start you need.
The Chapter 11 bankruptcy process provides similar relief to that provided in Chapter 7 and Chapter 13, but is generally reserved for filers with businesses or significant assets and is a lot more expensive than even a Chapter 13 bankruptcy. This article will focus specifically on Chapter 7 and Chapter 13 bankruptcy.
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How Does Bankruptcy Affect Assets And Liabilities
Depending on how you choose to declare bankruptcy, your assets and liabilities will be affected in different ways. In a Chapter 7 bankruptcy, many of your assets are up for liquidation to pay your creditors with the proceeds. In Chapter 13, you retain assets while working on a repayment plan for your outstanding debts.
See how bankruptcy affects assets and debts in the following debtee categories.
Small Business Owners
For small business owners with lots of personal debt, bankruptcy may help them continue to stay in business. It’s important to note that business debts aren’t alleviated with Chapter 7 or Chapter 13 unless you’re a sole proprietor and are personally responsible for them.
- Chapter 7: For sole proprietors, business and personal debts can be wiped out in a single bankruptcy case. You’re not obligated to meet income requirements if your business debt exceeds your personal debt.
- Chapter 13: Your business assets aren’t liquidated, but only your personal liability for business debts can be wiped out. The business remains responsible for its debts.
Some business assets can be exempt from Chapter 7 bankruptcy filings. For instance, if your business is service-based and doesn’t maintain equipment or significant inventory, you can likely continue to run your business after discharging business debts through bankruptcy.
Student Loan Holders
Other Things To Know:
- If the IRS is listed as a creditor in their bankruptcy, the IRS will receive electronic notice about their case from the U.S. Bankruptcy Courts. People can check by calling the IRS’ Centralized Insolvency Operation at and giving them the bankruptcy case number.
- If one of the reasons a taxpayer is filing bankruptcy is overdue federal tax debts, they may need to increase their withholding or their estimated tax payments. The Tax Withholding Estimator can help people determine the proper withholding. The IRS.gov Estimated Taxes page has more information on estimated taxes.
- People can receive tax refunds while in bankruptcy. However, refunds may be subject to delay or used to pay down their tax debts. Taxpayers can see if their refund has been delayed or offset against their tax debts by going to the Where’s My Refund? tool or by contacting the Centralized Insolvency Operations Unit.
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Chapter 13 Bankruptcy Attorney
If youre looking for a way to regain control of your finances and you have a steady source of income, Chapter 13 bankruptcy may be the most optimal solution for you. Weve spent the last several decades practicing bankruptcy law in Nevada, and weve successfully helped thousands of folks just like you navigate bankruptcy in Las Vegas and surrounding areas. Reach out to our experienced bankruptcy attorneys today to help you find the best solution for YOU. Call us for a free, no-obligation consultation. Were here to help.
What Happens When You File Bankruptcy
What happens when you declare bankruptcy? After you file bankruptcy you are granted an automatic stay, which is essentially a block put in place to keep creditors from trying to collect on debts.
Creditors almost always try to collect on debts through Texas State Court breach-of-contract claims. This is why bankruptcy happens in federal court, where federal actions have the power to preempt state court actions under the Constitution. What this means is that after filing bankruptcy, your creditors cant deduct money from your bank account, garnish your wages, evict you from your home, repo your car or go after any of your other assets while your bankruptcy is ongoing.
What happens after you file bankruptcy is that you are given a case number and a trustee is assigned to your case. You will next be scheduled to attend credit management classes, as well as a creditors meeting between you, your trustee, and any creditors who wish to be heard. During the meeting, which is more like a conference than a trial, the trustee will ask you questions about your financial status.
One question we often hear is if you declare bankruptcy can you leave the country? The answer is yes, as long as you are present for all of your scheduled meetings.
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Filing For A Second Case Even If You Are Not Entitled To A Discharge
How often you can declare bankruptcy depends on the type of bankruptcy discharge that you have. But you can still file for a second case even if you were not entitled to a discharge on the previous cases that you have filed.
There are instances when filing for bankruptcy can help even if you are not eligible for a discharge. Situations such as being behind on your tax or mortgage payments allow you for an automatic stay. You can take time with a bankruptcy case to catch up on your missed debt payments. The automatic stay is applicable to everyone who wants to file for bankruptcy even if they are unable to get a discharge.
How To Know When To File Bankruptcy: Tips And Considerations
Bankruptcy is an option if you have too much debt. Find out if bankruptcy protection is right for you, the differences between types of bankruptcy, when to file, and what to expect.
It can be confusing to distinguish between the different types of bankruptcy and to know when it’s appropriate to file for it.
In this guide, we’ll cover Chapter 7 and Chapter 13the two most common types of bankruptcyand will explain what happens when you declare bankruptcy, how to do so, and questions you should ask yourself to determine whether bankruptcy is right for you.
What Do You Do When Filing
When youre filing for Chapter 13 bankruptcy, your main job is to be as transparent and responsible as possible. Filing for Chapter 13 bankruptcy is telling the courts and your creditors that youre going to make your payments on time and in full. Should you choose to work with a bankruptcy lawyer, its important to not hide anything and allow them to help you ensure the bankruptcy process is as smooth as possible.
Chapter 7 Vs Chapter 13 Bankruptcy
In Chapter 13, you have a chance to keep all your stuff. In Chapter 7 bankruptcy, you probably can keep most of your necessary stuff , but will have to liquidate things deemed non-exempt by a bankruptcy trustee.
Thats the quick answer, though its not quite that simple.
With Chapter 7, you sell some or all of non-exempt things like your second car, any property you might own and things of value like art, stamp, coin or card collections. The process concludes within six months of filing. Any wages or property you acquire after filing, except inheritances, arent subject to distribution to creditors.
With Chapter 7, lenders who have already filed to foreclose on your home are only temporarily stalled, and other debts such as mortgage liens can be collected after the case is concluded. Cosigners on your debts are still obligated to pay.
Chapter 7 requires your income falls below the median level income for your state, or you must pass a means test. If you fail to meet the Chapter 7 income limit or means test requirements, Chapter 13 is the alternative.
Before Filing A Bankruptcy Petition
Bankruptcy can resolve your debt problems, but you should consider it a last-gasp option. Before deciding if you should file for bankruptcy, look for alternatives or advice that might be a less damaging choice. Some possibilities include:
Nonprofit credit counseling agencies provide free budgeting advice and suggestions for other debt-relief options. Churches, charitable organizations and government agencies also provide counseling without charge, or they can refer you somewhere than can help. The goal is to review your finances and suggest solutions for your debt.
Debt Management This is one of a few debt-relief programs that might make it possible to avoid filing bankruptcy. The primary goal of debt management is to reduce the interest rate on credit card debt and lower the monthly payments you make to an affordable rate. Debt management plans take 3-5 years to complete.
Debt Consolidation If you owe balances on multiple credit cards, a debt consolidation loan will allow you to pay off all the credit card debt and be left with a lower-cost loan repayment. Your credit score will influence whether the interest rate you pay offers substantial savings or not.
Who Can File For Chapter 7 Bankruptcy
You must qualify for Chapter 7 by meeting certain criteria. If you fail to meet Chapter 7 requirements, a Bankruptcy Court can convert the case to a Chapter 13 bankruptcy. The only exceptions are:
- Disabled veterans that file to eliminate debt they got while on active military duty
- Filers with debt that primarily came from operating a business
Note: Before October 17, 2005, it was largely up to a bankruptcy judge to decide whether a debtor met Chapter 7 requirements. Judges could use substantial discretion when assessing the debtor’s financial situation. As a result, under the old law, most filers chose to have the debt discharged even if they were financially capable of repaying the debt in a Chapter 13 repayment plan. Consequently, the intent of the current bankruptcy law is to weed out filers who can afford to repay some debt.
The following are circumstances in which a debtor is not eligible for Chapter 7.
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