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Understanding Bankruptcy

A Guide to Filing Bankruptcy

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A Guide to Filing Bankruptcy

 When you realize that your current financial situation would best be served by declaring bankruptcy, the following response is “How?”.  How do I file for bankruptcy? What is required? Do I need a lawyer? These questions and more will be answered as we explain the filing processes for chapter 7 and chapter 13 bankruptcy and how to get started.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

FIRST STEP

Before you can file for bankruptcy, you legally must attend credit counseling with an approved credit counseling agency within 180 days before filing. A counseling session typically costs around fifty dollars, but if you are unable to pay the agency should be able to waive the fee. After completing the course, you will receive a certificate that must be submitted with the other required documents when you file.

WHAT IS CH. 7 AND DO I QUALIFY?

Chapter Seven bankruptcy relieves the debts of individuals, partnerships, or businesses through a process called liquidation. Liquidation is the use of eligible assets to pay off as much of the filers’ outstanding debt as possible and eliminating the remainder. You may lose some property, but there is an exemption form to complete for eligible assets that will not be used in liquidation. Important to know is that complete discharge of qualifying debts is only available to individuals. There are debts such as child support and fraudulently accrued debt that will not be eliminated. 

DOCUMENTS

When filing for bankruptcy, you will complete a petition, statement of affairs, and schedules. The first step will be the petition which officially declares and outlines your case for bankruptcy. Your list of assets and liabilities will be included in the statement of affairs, and the schedules are forms that outline your financial status and includes a form to list permitted property for exemption. There is a lot of information that fills these documents. You’ll need to know:

  1.  The names of all your creditors
  2. The amount and nature of their claims
  3.  The total amount of income you take in, its source, and frequency
  4. A list of all of your property
  5. All your monthly living expenses in detail

After compiling and submitting all of the required information, you will wait on the court to notify you if your petition is approved or denied, and the bankruptcy procedures will continue from there.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

What is Bankruptcy?

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Back to Basics

What is Bankruptcy?

Filing for bankruptcy is an opportunity to start new. While it does affect your credit score for several years, you have the chance to begin rebuilding it as soon as your case is approved and closed.  If you are an individual looking to file bankruptcy, contact your local bankruptcy attorney to help you through the process. Attorneys offer expertise in court and negotiations. They can help you get the best deal from your case and assist you through the legal procedures and terminology that you may not understand.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

When you acquire more debt than you and your income can handle, it may be time to file for bankruptcy. It may sound frightening or embarrassing, but the reason the program exists is to help you, not to hurt you.  Bankruptcy is a federal court procedure to help reduce, restructure, and/or eradicate debt. However, this does not mean any debt for any one can be forgiven. There are qualifications one must meet before he or she can file for bankruptcy.

Individuals and businesses who have a debt so large, they are not able to repay it all may be eligible to file. There are different qualifications for each type of bankruptcy. The first and most common type of bankruptcy applies mostly to individuals. It is Chapter 7 bankruptcy, and it allows debts to be forgiven and certain assets to be exempt from liquidation. Your not essential/ non exempt assets will be sold/ obtained to repay some of your debt if possible. The remaining balance will be forgiven.

Chapter 13 bankruptcy is sometimes known as “wage-earner’s” bankruptcy. Your debt cannot exceed a certain amount, and you will create a 3-5 year payment plan. If your payment plan is successful, the remainder of your debts will be forgiven. An important note, these bankruptcy reports will stay on your record either 7 (chapter 13) or 10 years (chapter 7). Which makes purchasing a new line of credit or finding a new job much more difficult. 

Although Chapter 7 and Chapter 13 are the most popular forms of bankruptcy, there are a few other forms that aid individuals and businesses in more specific cases. Chapter 9 applies to cities and towns to protect them from creditors as they develop a plan to repay their debts. Chapter 11, also known as “reorganization bankruptcy”, allows businesses to continue serving customers while figuring out a payment plan. Chapter 12 is a lot different than the others. It is specifically applicable to family farmers and fishermen who make no more than $4.07 million for farmers or $1.87 million for fishermen. These filers will have a payment plan that must be completed within five years (with seasonal consideration). Finally, for those with debts and assets in both the United States and another country or countries, there is Chapter 15 bankruptcy. The U.S. court will handle the case regarding the assets and debts in the United States only.

Bankruptcy does not discharge the following types of debt: federal student loans, taxes, alimony and child support, debt acquired after filing for bankruptcy, and some debt if acquired 6 months prior to filing. It also does not eliminate debt from fraudulent loans or personal injury from driving while intoxicated. It also does not release a co-signer from his or her responsibility to pay your loan in full or in part, if you fail to do so. 

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.