Money can become a problem and create some tough times ahead. If money is running low and you’re barely staying afloat, you still have options. There are bankruptcy options that can help to improve your future. Before filing, it’s best to consult an attorney in order to decide the best way possible to fix your financial problem. The two options most used by individuals are called Chapter 7 and Chapter 13.
When debt has become too overwhelming, you have the option to file for Chapter 7 bankruptcy. Before filing for bankruptcy, people have to be eligible. Credit counseling by a United States approved agency is required within the 6 months prior to filing, along with a debtor education course. Individuals must then pass the means test in order to continue with the process. The means test is when the individual filing for bankruptcy compares their income to the median income in the country. If the income is below the median income, you may be eligible to file for bankruptcy. However, if it is over the median income, you may not be eligible. Although it has happened before where those with incomes above the median income have been deemed eligible to file, it is less likely.
After the initial stages, the process of filing begins. Next, you will file a petition for bankruptcy, along with other forms. In these forms, you will be asked to claim, a list of all debts, an account of your income, your monthly living expenses and a list of all assets, including real estate and personal possessions.
Once the paperwork for Chapter 7 bankruptcy is filed completely, an automatic stay goes into effect. This means that you will not get any calls from your creditors asking for the money to pay off your debts. However, they can contact you if they get a court order. A court-appointed agent, a bankruptcy trustee, is then put in charge of your assets. This trustee will make the decisions on assigning a value to your property and using your assets to pay as much of your debt as possible. The meeting of the creditors is when you, your attorney, creditors who wish to attend and your trustee will discuss your bankruptcy. At this meeting, creditors can compile information to reject the case. If you’re successful, your debts should be cleared. Only your credit score should be affected. With financial planning, you can improve your situation for the future.
Chapter 13 bankruptcy can help you develop a repayment plan if you have a regular income. This repayment plan can be over 3 to 5 years. When it’s compared to Chapter 7 bankruptcy, Chapter 13 has a few more advantages. Most people are able to save their home and reschedule debts by extending them due to the repayment plan and this acts as a consolidation loan.
In order to file for Chapter 13 bankruptcy, you need to receive credit counseling within 180 days before filing. If another petition was dismissed within the 180 days, you cannot file. You can still file for bankruptcy if you are self-employed or operate an unincorporated business. However, you are only eligible if your secured debts and unsecured debts are less than the capped amount.
Once you file for bankruptcy, you should file documents that include 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.
Creditors are then barred from contacting you regarding your debt. If your home goes into foreclosure, it will stop the process and give you some time to possibly save it. You should file a repayment plan within 14 days of the petition unless the court grants an extension. A meeting with you, your attorney, your trustee and creditors who wish to attend is held where you discuss your financial situation and a repayment plan. When you filed for bankruptcy, you should have filed a repayment plan that detailed the schedule of payments that the trustee will distribute to the creditors. A judge will decide within 45 days if the repayment plan is sufficient and if cleared, the payments should begin within 30 days after filing.
For strong legal representation from an experienced team of personal injury, bankruptcy, workers’ compensation, criminal defense, or family law attorneys, contact Underwood & Micklin and we would be happy to schedule a consultation to discuss your matter.