Bankruptcy is an option for people or businesses that owe more money to their creditors than they are able to pay back and are behind in their debt payments. Bankruptcy allows the debtor to work out a repayment plan over time or discharge (eliminate) most of the debt. One of the purposes of bankruptcy is to provide a fresh financial start to a person hopelessly in debt due to unemployment, large medical bills, over-extended credit, and marital issues.
The decision to file for bankruptcy protection will affect your credit rating, and can possibly impact future employment opportunities and the ability to rent. Bankruptcy stays on your credit report for at least seven years.
Be extremely careful when using credit counselors. In most cases, filing bankruptcy takes less money, is easier, and rebuilds credit faster. There is widespread abuse in the credit counseling industry. Oftentimes unscrupulous companies take advantage of financially challenged people.
It depends –not all financial distress situations require filing for bankruptcy. For example, if the debtor’s financial setback is temporary, the best solution is to contact the creditors directly and work out a reasonable repayment program. Also, if you have very little personal property that can be collected by a creditor, bankruptcy may not be necessary.
You should meet with a qualified bankruptcy attorney with a complete list of your creditors, amount owed and schedule of past payments. You should also make a list of your current personal liabilities and assets (home equity, automobiles, recreational equipment, furniture, electronic equipment, etc.)
The best advice is to stop using your credit cards as soon as you plan to file for bankruptcy. The bankruptcy court can review any purchases or cash advances made prior to the filing and possibly exclude them if questionable.
Bankruptcy requires a filing fee with the court, as well as the attorney fee for preparing and executing the bankruptcy filing for you. The attorney fee varies according to the type of bankruptcy protection you are seeking.
No, some debt may be secured while other debt may be unsecured. Secured debt is any debt that is attached to a person’s property, such as an automobile or a home mortgage. With secured debt, the creditor has claim to that particular property, even if the debtor files bankruptcy. Unsecured debt isn’t attached to any particular property.
In general, you may continue to be responsible for the following debts, even if you file for bankruptcy protection:-Federal, state or local taxes-Property, money, services or credit obtained through fraudulent means-Alimony or child support-School loans associated with a government program-Debts not listed in the bankruptcy filing-Legal judgments pertaining to death or personal injury of another person-Any debt incurred after a bankruptcy filing-Any other legal judgment against you
Laws vary by state, but typically the following property is exempt: certain jewelry, personal vehicles (up to a certain value), home equity (up to a certain amount), and any tools or equipment necessary to continue employment.
A Chapter 13 bankruptcy is a financial reorganization for those debtors who look to repay their creditors with an approved repayment plan. A Chapter 7 bankruptcy is used when the debtor seeks to discharge most creditor claims. In turn, the assets of the debtor are liquidated and used to pay creditors. The choice between Chapter 13 and Chapter 7 is usually dependent if the debtor has the income or assets to eventually pay off all or part of the debt. A bankruptcy attorney can help the debtor decide which is best for the circumstances.
If filing for Utah Chapter 13, it must be filed four years from a previous Utah Chapter 7 or two years from a previous Chapter 13. If filing for a Chapter 7, eight years must pass before filing for another Chapter 7 bankruptcy or six years from a Chapter 13 filing.
Home ownership depends on state law and what exemptions are allowed by that state. If your house is in foreclosure, your options may be limited. Also, if you’re filing for Chapter 13 protection and are current on your payments, you are in a better position to keep your home than if you file for Chapter 7.
The courts allow a person and spouse to file a joint petition. However, unmarried partners must file for bankruptcy separately. If one spouse files and the other spouse does not file, the debt may become the responsibility of the spouse not filing. Be sure to seek the advice of a bankruptcy attorney before proceeding with this action.
Your divorce decree should have language that would protect you from any future bankruptcy proceedings from your ex-spouse. However, if you co-signed for a debt prior to the divorce, the creditor may come to you for payment of the debt.
Any retirement account or pension that is qualified by the Employee Retirement Income Security Act (ERISA) is not considered an asset. By law, social security benefits are protected from garnishment for any bankruptcy debt.
Depending on the date of when you collect the inheritance, the assets from the inheritance may be included in your bankruptcy estate and can be used to pay creditors. Your bankruptcy attorney should be consulted on how best to proceed with an inheritance.
Bankruptcy remains on your credit report anywhere from 7 to 10 years. You may be able to submit an explanation of your bankruptcy to the credit report agencies. If the dates or other details of your bankruptcy are listed incorrectly, you may request a correction along with the proper documentation.
While the debtor is the process of filing for bankruptcy, creditors must halt all collection efforts. After bankruptcy relief is ordered, you are then protected from those creditors. If a creditor contacts you afterwards, you should furnish the creditor with your bankruptcy case number and filing date, or a copy of the petition. If a creditor continues to contact you, the creditor is breaking the law and legal action can be taken against the creditor.
The bankruptcy court mails notices to all creditors informing them of the filing and the issuing of an automatic stay. The notice also informs the creditors of the trustee, the deadline for filing objections, and when the creditors meeting will be held.
The trustee is a person appointed by the bankruptcy court to administer the bankruptcy and is responsible to get as much payment as possible to the creditors. The trustee holds creditor meetings, collects money from the debtor, sells property not exempt from bankruptcy, and oversees the repayment plan. The trustee is not necessarily an attorney.
The trustee will call a creditors meeting, which must be attended by the debtor. This meeting is open to all creditors who are listed in the bankruptcy filing. At the meeting, the debtor should be expected to answer questions about how the financial situation occurred, the debtor’s assets, possible disposal of property, and other debts (including secured debt). If a debtor does not attend the creditors meeting or presents false information, the bankruptcy petition may be withdrawn.
Creditors have the right to object to a bankruptcy repayment plan or if the debt is eliminated. With Chapter 13, creditors can object to a particular repayment plan. If no objections are submitted, the plan may be implemented as filed. With Chapter 7, creditors usually have 60 days after the first creditors meeting with the trustee to object. If the objection is not resolved during bankruptcy proceedings, a trial may be held to decide the matter.
The law does not forbid you from applying for credit after a bankruptcy, but nearly all creditors are hesitant to extend credit where bankruptcy is involved. The best way to obtain credit is to talk to the creditor directly and explain the circumstances of your bankruptcy. However, the final decision is up to the creditor.