We are a debt relief agency. We help people file for bankruptcy under the U.S. Bankruptcy Code.
Below you will find some information about consumer bankruptcy. The information provided is general in nature and is not intended as legal advise. We hope that it provides you with a general idea of bankruptcy and the process.
WHY FILE FOR BANKRUPTCY
A stated purpose for bankruptcy is to provide the honest debtor a fresh start. If you have more debt than you can repay in a reasonable time or you are being pursued by creditors but can not pay then bankruptcy may provide relief from creditors and debt. Further, a Chapter 13 may provide a viable way to crue a default and save property, such as a house, from foreclosure.
THE AUTOMATIC STAY
The first usual benefit of filing a bankruptcy petition under either Chapter 7 or Chapter 13 is the law which requires an automatic stay that stops most all collection efforts during the bankruptcy process. As the name implies, the stay is automatic and comes into existence immediately upon filing the petition.
The Automatic Stay in Bankruptcy May Stop:
Creditor Phone Calls
Garnishments
Law Suits
Foreclosures
Repossession Efforts
The automatic stay is temporary. Assuming there hasn't been any prior court orders or bankruptcy filings effecting the stay and that the bankruptcy filing is valid, the stay provides protection from most creditors during the bankruptcy process. If and when a discharge is entered the stay is replaced by a permanent injunction against attempts to collect debts that have been discharged.
WHICH CHAPTER IS BEST
Which Chapter is best to file under depends on what you want to accomplish and the circumstances. A Chapter 7 is faster and cheaper. But, a Chapter 13 may be required or may simply be better suited to your needs. Three of the most common considerations in determining which Chapter is appropriate or best are stated below.
First, there is a means test. The means test is now embodied in a form with math calculations to determine if a debtor has the means or ability to fund a meaningful Chapter 13 plan. If your household income is above a stated amount then a presumption of abuse will arise if you file a Chapter 7. The stated amount depends on the number of people in your household and where you live. However, even if your household income is above the stated amount, there are deductions which you may be able to take which will reduce your disposable income and possibly prevent the presumption from arising. If the presumption still arises after taking all of the allowed deductions then a Chapter 13 is very likely to be the appropriate Chapter.
Second, if you are behind on payments that are secured by collateral, such as mortgage payments, and you want to keep the property then a Chapter 13 should be considered because it allows a debtor to cure a default over time. A Chapter 7 does not provide you a legal right to cure a default by making payments over time.
Third, the value of your property, both real and personal, may be greater than you can exempt. Filing a Chapter 7 might mean that you must turn some property over to the Trustee for liquidation or buy it back from the Trustee. A Chapter 7 Trustee is likely to allow the debtor a short time to buy the non-exempt assets. A Chapter 13 would allow a much longer time to pay the non-exempt portion.
Although there may be good reason to file a Chapter 13, a Chapter 7 may be more desirable and appropriate. If your household income does not result in a presumption of abuse and you are not trying accomplish something that you won't be able to do in a Chapter 7 then a Chapter 7 is likely to be the better Chapter to file under.
EXEMPTIONS AND
KEEPING PROPERTY
A common goal in bankruptcy is to lose the debt but keep property. Exemptions are used to keep property out the bankruptcy estate. However, exemptions are limited in number and some are limited by dollar amounts. Consequently, knowing your exemptions before filing is very important. The exemptions may determine what property you keep or in the case of a Chapter 13, may effect the Chapter 13 plan payment amount.
Many Chapter 7 cases are no asset cases. That means the debtor was able to exempt all of the debtor's property.
Please bear in mind that exempting property may keep it out of the bankruptcy estate but if the property is subject to a lien you may still need to pay the creditor or surrender the property to that creditor.
Don't get caught by surprise on exemptions. It's important to know in advance if you are at risk of losing property. If you file a petition in bankruptcy you have an obligation to disclose all of your assets. Failing to disclose assets or hiding property will increase your risk of a bad outcome in bankruptcy. Instead, use your exemptions to their fullest and be prepared to buy back or turn over the non-exempt assets to the Trustee
THE TRUSTEE
If you file a bankruptcy petition, a Trustee will be assigned to your case. An important function of a Trustee is to administer the bankruptcy estate. In a Chapter 7 that means liquidating the non-exempt assets, if any, and paying creditors their share. In a Chapter 13, the Trustee collects the Chapter 13 plan payments and distributes the funds to the creditors pursuant to a confirmed plan.
The Trustees do have other functions, such as examining the debtor at a meeting of the creditors. The meeting is also known as a §341 meeting. Even though it is called a meeting of the creditors they rarely attend.
The Trustee may file various motions in your case. The Trustees working the cases in the Tampa Division are, in my opinion, good people and they try to be fair. But they have a job to do and their view of what should be done may be different from the debtors view. Consequently, a Trustee in bankruptcy can be like a built-in adversary. An attorney with experience may be able to resolve issues with the Trustee and more importantly, may be able to prevent issues from arising in your case.
THE DISCHARGE
A discharge in bankruptcy terminates your legal obligation to pay the debts that were discharged. It also prevents creditors from making any attempts to collect discharged debts. However, liens are not discharged. It is only your personal obligation to pay that is discharged.
THE LAWYER
A lawyer, admitted to practice in the Bankruptcy Court where you file, can represent you in Court and at the meeting of the creditors. A non-lawyer bankruptcy petition preparer can not represent you. Further, neither the Judge nor the Trustee assigned to your case is your lawyer and neither will provide legal advice. But a properly admitted attorney can provide advice and guidance.
WARNING
What may seem as good bankruptcy planning by one may be called bankruptcy fraud by another. If you are considering arranging your affairs before filing a bankruptcy petition, consult with somebody that deals with bankruptcy issues on a regular basis. Mistakes can be costly.