Can't pay bills and need debt relief? Free bankruptcy filing tips and legal advice about Chapter 7, 11 and 13, plus alternatives such as credit co
Chapter 7 Bankruptcy is known as liquidation or straight bankruptcy. This can be the simplest and quickest option for some individuals, corporations, or partnerships. A trustee, which is appointed by the court, collects and sells your nonexempt property. The money from the sale is used to pay your creditors and you can keep any exempt property. You would need to check with your state, but exempt property could be such things as real estate, professional tools, books, unmatured life insurance, prescription health aide, veteran's benefits, disability or employment benefits, and proceeds from a judgment. There are state and federal exempt property lists. Most chapter 7 cases are no-asset cases or rather that there is not any nonexempt property for the trustee to sell. When you file for bankruptcy, you state whether your case is "asset" or "no-asset."
Bankruptcy starts with the filing of an official petition and statement of financial affairs in bankruptcy court. You must provide a list of all your creditors and the amount of their claim, your properties, your income and details of your living expenses. Once you file for bankruptcy, creditors can't try to collect on your debts and this gives you a break from being sued. Creditors must prove to the bankruptcy judge there is cause for a collection action. Chapter 7 will not stop repossession or a foreclosure. Only by filing Chapter 13 can you delay a foreclosure. It is best to take some time when deciding whether to file and which chapter to file. You can't file again for two years and it is important to choose the right way to file from the beginning.
Bankruptcy Lawyer - For consumers considering bankruptcy, it may help to visit a bankruptcy lawyer, if the initial consultation is free. A lawyer can advise you of your rights and give valuable information about the types of bankruptcy and how it works. This may be a worth while visit if there is a lot of financial stress or there is the fear of losing assets. A bankruptcy lawyer or even a credit counselor should be considered when debts are more than you can cope with before making any final decisions or bad choices. Seek the help and support of family members when you need some input as to what option might be best for you to get out of debts.
Bankruptcy does have an impact on personal credit for ten years, but when debts can't be repaid due to financial, medical, or other hardships it may be the only option to have a new start. There are over 9 federal judicial districts that handles bankruptcy matters and bankruptcy cases are filed in the bankruptcy court as they can't be filed in state court. Bankruptcy is a choice for some consumers as a way to liquidate their assets to pay debts or by creating a repayment plan. Most cases are filed under the three main chapters of the Bankruptcy Code, which are Chapter 7, Chapter 11, and Chapter 13.
In 2005, the Bankruptcy Code was amended and requires most individual debtors complete a special briefing from an approved credit counseling agency before filing a bankruptcy case. The United States trustee and the bankruptcy administrators maintain a list of approved providers that offer the special pre-bankruptcy briefing. Bankruptcy is not a quick method to get relief from debts and could take months before it is over after filing. Unfortunately, bankruptcy cases filed in federal courts for 2009 had increased from 2008. Consider seeking information about debt consolidation as an option for debt relief.
Bankruptcy law can allow a plan for a debtor, who is unable to pay creditors, to try to resolve the debts by dividing assets among the creditors. The division takes into account the interests of all creditors to have some equality. There are some bankruptcy proceedings that can allow a debtor to stay in business and use revenue to resolve the debts. A purpose of bankruptcy law is to let certain debtors to be discharged of the financial obligations after the assets are distributed, even if debts are not paid in full. Bankruptcy law is a federal statutory law contained the United States Code and Congress passed the Bankruptcy Code to establish some uniform laws throughout the United States. States may not regulate bankruptcy, though they can pass laws that govern some aspects of the debtor-creditor relationship.
Bankruptcy proceedings are supervised by United States Bankruptcy Courts, and the courts are a part of the District Courts of the United States. United States Trustees were established by Congress to take care of supervisory and administrative duties of bankruptcy proceedings. Proceedings in bankruptcy courts follow the Bankruptcy Rules which were promulgated by the Supreme Court. Bankruptcy proceedings filed under Chapter 7, called liquidation, is the most common type of bankruptcy. An appointed trustee collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Bankruptcy proceedings under Chapters 11, 12, and 13 involve the rehabilitation of the debtor to allow the use of future earnings to pay off creditors. Chapter 7, 12, 13, and some 11 proceedings is when a trustee is appointed to supervise the assets of the debtor.
A bankruptcy proceeding can either be entered into by a debtor or initiated by creditors. After bankruptcy proceeding are filed, creditors may not try to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings. Even certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated as the Bankruptcy Code establishes the priority of creditors' interests.
A recent decision, in 2005, by the Supreme Court, shifted the power towards the debtor. The Court held that assets in Individual Retirement Accounts (IRA's) are protected and exempt from withdrawal from the bankruptcy estate. This decision provided millions of Americans close to retirement with protection of their earnings. The Bankruptcy Prevention and Consumer Protection Act, brought about reforms in bankruptcy law, concerning dismissal or conversion of Chapter 7 liquidations to Chapter 11 or 13 proceedings. The law expands the responsibilities of the United States Trustees Program to provide credit counseling to individuals before they file for bankruptcy and even provide financial education to individuals before they are discharged from debt. It can be a good idea if bankruptcy is being considered, to be sure to first seek the help and advice of a bankruptcy lawyer or credit counseling agency to determine all options.
Bankruptcy Filing - Some consumers wonder how they will file for bankruptcy when they already can't pay debts. Often the very consumers who need to file and owe tens of thousands of dollars in debts, have to get money just to file bankruptcy. For those who have debts that total more than they make in wages a year, bankruptcy may be the only option. There is also the expense of filing and finding the money to do so.
It costs to file bankruptcy and it costs for the attorney fees. Soon after hurricane Katrina, more consumers were filing for bankruptcy due to not having a home or job. Most consumers try to avoid bankruptcy if at all possible. The paperwork has become more difficult and there have been changes to requirements and laws for filing. Attorney fees can cost from a couple of hundred dollars to a couple of thousand dollars and the cost continues to go up for filing.
Some consumers choose to get money to file, by not paying bills, and instead use the money to file. Some argue that it does not matter if the bills are paid because they may be wiped out due to bankruptcy. Beware that if you rent, not paying the rent or mortgage may lead to being homeless. Be careful choosing what bills to not pay. For example, rent, home loans, and autos. If you need your auto to get to work, and the payments are not made, some lenders may repossess the auto if the payment is only a few days late. You may need to get to work each day, so this may be one bill that must be paid.
It is best to consult with an experienced bankruptcy attorney and let them tell you which bills to not pay. Most offer a free initial consultation and some may allow you to pay for their services over time. Some of your property may be exempt when you file for bankruptcy, but it may vary among states. For the property you can keep, consider selling it to get money. If there is equity in an auto, you may be able to get a loan using the auto as collateral. Consider asking friends and family for a loan to get money to file.
Retirement money is one asset that is protected from creditors and you must decide if you need to get money from it. If you were a victim of Hurricane Katrina, you may not be penalized if you withdraw a certain amount. You may have to pay regular income tax on the withdrawal, unless it is repaid within a specific time.
Because the new laws require more paperwork, be sure to check the qualifications of those you employ for bankruptcy advice. If they are not knowledgeable with bankruptcy laws, they could make mistakes. You don not want to risk filing and then have your case dismissed due to some mistake. It can be best to try to find an attorney who is knowledgeable and willing to handle a bankruptcy case.
Chapter 7 Bankruptcy and Debts - Filing Chapter 7 bankruptcy could include the protections of the Automatic Stay and Chapter 7 exemptions. These two programs are part of the bankruptcy code and can help protect your home, car, wages and other important possessions from creditors and can prevent foreclosure. Those consumers who may be eligible to file Chapter 7, are those who may owe huge amounts of credit card debts, medical bills, payday loans, some personal loans, and maybe utility bills.
Bankruptcy helps eliminate unsecured debts quickly to keep from waiting years to get a new start. Chapter 7 offers less protection for your property than Chapter 13 bankruptcy. The good thing about Chapter 7 is that it may let you to keep your home, car, tools, furniture, clothes, appliances, and some personal items. To qualify for Chapter 7 bankruptcy, a person must pass the means test and a local bankruptcy lawyer can help with this test. It concerns your income and debts to determine a need.
Chapter 7 was designed to eliminate unsecured debts of those who are struggling. Many lawyers give a free bankruptcy evaluation, which can eliminate the expenses of filing only to be turned down. By talking to a professional bankruptcy lawyer, a consumer is able to learn a great deal about the requirements and the process involved. An alternative to filing bankruptcy is to negotiate debt settlements with creditors.
A bankruptcy attorney can answer questions and lead a person through the steps. In addition, a lawyer can give some insight into how filing Chapter 7 will affect your debts and your future. This type of bankruptcy is fairly quick and may be completed and discharged within six months after filing. However, there are some things that can affect your right to file a case and get the relief available.
An automatic stay can be invoked when filing both Chapter 13 and Chapter 7 bankruptcy. For Chapter 13, the automatic stay provision may stay in effect during the repayment period, which could be 3-5 years. An automatic stay helps stop harassment, wage garnishment, lawsuits and foreclosure and it is important to talk to a bankruptcy attorney about this.
