BANKRUPTCY

General Questions

We can assist you with Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, Chapter 13 Bankruptcy, loans and mortgages (modifications, restructuring, and refinancing), bankruptcy alternatives, negotiations between creditors and you, and more.

Bankruptcy involves an individual or business that cannot provide payments for debts that they have incurred and have agreed to repay. The process for bankruptcy typically begins when the debtor (the individual or business in debt) files a petition. Once the process has begun, the debtor’s assets are inventoried, assessed, and evaluated to determine if the assets can be used as payment for any part of the outstanding debt or if there can be a restructuring of payment through an agreed upon plan.

There are six types of bankruptcy:

  • Chapter 7 – Liquidation or Straight Bankruptcy
  • Chapter 9 – Municipalities
  • Chapter 11 – Reorganization
  • Chapter 12 – Adjustment of Debts of a Family Farmer with Regular Annual Income
  • Chapter 13 – Adjustment of Debts of an Individual with Regular Income
  • Chapter 15 – International Bankruptcy

When a person or business files for bankruptcy they may be able to restructure debt payment, reduce or remove all debt, halt foreclosure on residential or commercially owned property, stop termination of utility services, block repossession of vehicles and other property, cease garnishment, block debt collection notices and other actions related to debt collection.

Yes, bankruptcy is not the only option or solution to dealing with your debt. Alternatives to bankruptcy include but are not limited to credit counseling, debt settlement, consolidation, selling assets, refinancing or restructuring a mortgage, change of lifestyle and budget, or seeking additional means of income..

Bankruptcy is not a cure-all fix to all financial issues or hardships a debtor may have currently, in the future, or as a result of filing for bankruptcy.  Bankruptcy will not solve the issue of living above your means or having reasonable and necessary expenses greater than your current income. Those seeking to file for bankruptcy should not take the decision lightly and should consider alternatives that may eliminate the need for proceeding with a bankruptcy petition and any consequences that result from filing.

No, however  debtors with smaller amounts of debt should consider how  their credit rating may be affected by bankruptcy and that courts may be less inclined to discharge small loan debt.

Known as “Liquidation” or “Straight Bankruptcy”, this chapter of bankruptcy deals with the Chapter 7 trustee selling off non-exempt assets and property of the debtor in order to repay outstanding debt to creditors. Individuals and businesses can file for this type of bankruptcy.

Typically, businesses file for Chapter 11 bankruptcy which is also called “Reorganization”.  Under this type of bankruptcy, the debtor business (corporation, partnership, sole proprietorship, limited liability companies, etc.) works to create an agreement with creditors to keep the business operational and restructure outstanding debt payments and to pay down debt over time.

Only individuals with a regular source of income may file this form of bankruptcy.  This chapter of bankruptcy known as “Adjustment of Debt for an Individual with Regular Income” is where the debtor with comes to an agreement with creditors to restructure a payment plan to repay outstanding debt.

Yes, once a bankruptcy petition is filed, an "Automatic Stay" is in effect immediately. This halts creditors from any and all collection attempts and actions including calling or contacting you in any way.

A bankruptcy must be in either the debtor’s name only or the debtor and his/her spouse jointly.  If more than one debtor is associated with the debt, each debtor must decide whether a bankruptcy is right for them.  If an individual files independently when the debt is associated with one or more additional persons, the other person(s) may still be accountable for the debt, even if the individual who filed the petition has been discharged of the debt.

Once a petition for bankruptcy is filed, the individual(s) who petitioned for bankruptcy must appear at a proceeding called the “Creditor’s Meeting” or the “341 Meeting of Creditors” with an appointed bankruptcy trustee in order for the court to verify the identity of the individual(s) and the accuracy and details of the bankruptcy filing, as well as provide the opportunity for the individual(s) to inform the trustee of any changes or updates since the time of filing the petition. After this meeting, you may or may not have to reappear in court.  How often you will be required to attend a proceeding with the Court will depend on what type of bankruptcy you file.

When filing for a chapter 7 or a chapter 13 bankruptcy, individual(s) or businesses will be assigned a bankruptcy trustee who is appointed by the courts. Trustees have a range of duties related but are not limited to investigation of property owned by the debtor(s), reviewing bankruptcy petitions and financial documents, attending the 341 Meeting of Creditors hearing, collection of non-exempt property for sale and distributing sale proceeds to creditors, reviewing reorganization and restructuring bankruptcy plans, ensuring fairness on behalf of both the debtor(s) and creditor(s), and overseeing businesses still in operation under a reorganization plan.

Yes, an individual filing for Chapter 7 or Chapter 13 bankruptcy is required to take a “Pre-Bankruptcy Credit Counseling” course within 180 days prior to filing for bankruptcy. This allows individuals to determine if bankruptcy is the right step to take or if other alternatives can be taken as opposed to filing. Once the course is completed, a certificate of completion will be issued and must be submitted to the bankruptcy court.

Yes, bankruptcy filings are public unless sealed by court order. Your bankruptcy petition will be reported to major credit bureaus and will be recorded on your credit record for up to 10 years.

Yes, before receiving any discharge from the court any individual debtor will be required to take a personal financial management counseling class commonly called the "Debtor Education" course. This assists individuals on how to budget and manage their finances. Once the course is completed, a certificate of completion will be issued. The course must be taken before receiving your discharge in the bankruptcy.

No.  You will not be able to keep any credit card or line of credit that you have at the time of filing.

Yes, however, it will be at the discretion of the business entity or bank to approve your applicability for a line of credit in any specified amount. Secured credit cards may be an option to consider should you want to get a new credit card.

Yes, it does impact your credit score and ratings. Bankruptcy will remain on your credit record for 7-10 years. After bankruptcy is filed, you can begin to improve your credit score if it was negatively impacted by the bankruptcy.

No, concealing assets during bankruptcy filings and from the court is considered a federal felony offense. The court can dismiss your bankruptcy case or revoke your discharge due to inaccurate information concerning your assets. In addition, if found guilty of concealing assets you may be fined, imprisoned, or both.

You will be able to keep all exempt property, as well as anything obtained after the bankruptcy is filed. Exceptions may be made within 180 days after filing if individuals receive the following but are not limited to inheritance, settlements related to property, life insurance, or material or monetary gifts that are considered non-exempt property.  If you file a Chapter 13 bankruptcy, you may be able to retain more property than just your exempt property.

Exempt property is a creation of state law and every state has a different list of exempt assets.  What state’s exemptions apply depends on your residence at the time of filing as well as during the 2-3 years prior to filing.  What property is exempt is based on the dollar values of the property based on categories including but not limited to a residence, household goods, wages, a motor vehicle, tools of the trade, college funds, retirement plans, life insurance, child support, health aids, and many government benefits.

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