For individuals, Chapter 7 and Chapter 13 bankruptcy can be two options that could help your situation. This may give you the opportunity you need to improve your financial situation and prepare for a better financial future.
How do I proceed with Chapter 7 bankruptcy?
Before filing for Chapter 7 bankruptcy, individuals have to complete credit counseling sessions and attend a debtor education course to better prepare themselves for the process and what comes after. After they complete the requirements, they must pass the means test. This test compares an individual’s income to the median income in the United States. To be eligible to claim bankruptcy, their income has to be below the median income.
Once you have met the eligibility requirements, a petition for bankruptcy must be filled out. In this petition, you will have to list certain aspects of your finances. You have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. When the paperwork is finally completed, an automatic stay will go into effect immediately.
Is the process for Chapter 13 bankruptcy the same?
Filing for Chapter 13 bankruptcy is very similar to the process that individuals go through for Chapter 7 bankruptcy. Requirements need to be met to be eligible. This includes credit counseling 180 days before filing for bankruptcy. If you previously filed a petition that was dismissed within that 180 days, you cannot file again.
Once you file for bankruptcy, you should include documents that outline a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication in a rise of income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts.
An automatic stay will also go into effect for Chapter 13 bankruptcy. Once the paperwork is completed and filed, the automatic stay goes into effect immediately.
What is the automatic stay?
When filing for bankruptcy, individuals will have an automatic stay that goes into effect upon filing. The automatic stay bars creditors from harassing debtors. Creditors are not allowed to contact individuals in pursuit of compensation for their debt. This can give individuals the space they need to create a repayment plan. No longer will debtors have to face the stress of dealing with harassment from creditors.
For strong legal representation from an experienced personal injury, bankruptcy, workers’ compensation, criminal defense, or family law attorney, contact Underwood & Micklin and we would be happy to schedule a consultation to discuss your matter.