Filing bankruptcy enables a debtor to repay his or her debts to the creditors. Several advantages come with filing for bankruptcy. This includes an automatic stay, which takes effect immediately once the bankruptcy court has approved your bankruptcy petition. This may protect you from creditor harassment and wage garnishment. Struggling with debt and financial problems can be stressful. For this reason, seeking legal help with a reliable bankruptcy attorney is extremely important. He or she can help you understand basic bankruptcy law and the specifics of the bankruptcy process. This will prevent you from encountering legal issues during the actual proceeding.
There are different types of bankruptcy. The most commonly used are Chapter 7, or liquidation bankruptcy, and Chapter 13, or reorganization bankruptcy. If you are considering bankruptcy, you may try to evaluate your eligibility by looking into your monthly income, living expenses, and the types of debt that you owe. The bankruptcy means test is also used to determine whether you are eligible to file for bankruptcy under Chapter 7.
Bankruptcy cases filed under Chapter 7 are usually finished after a few months. This is unlike Chapter 13, which would last for years. When declaring bankruptcy under Chapter 7, the bankruptcy trustee shall liquidate your nonexempt assets and allocate the sales to your debt collectors. As part of the usual bankruptcy procedure, the trustee will also ensure that there is no interaction between the debtor and any creditor.
When you file for bankruptcy under Chapter 7, you may want to consider these factors:
Unsecured Debt and Secured Debt
Oftentimes, the main objective of an individual who decides to file Bankruptcy Chapter 7 is to wipe out unsecured debts. This term often refers to credit card bills and medical bills (in contrast to mortgage payments for car loans, where the car is the collateral). However, although not considered as secured debts, keep in mind that child support, alimony, student loan debt, and certain tax debt are likely non-dischargeable.
Obtaining Bankruptcy Discharge
Bankruptcy laws make it possible for creditors to file a motion to object to a petition in bankruptcy until the court issues a decision. If the creditor can show that transactions occurred within a particular period leading up to the date of filing, the federal bankruptcy court may reject a filer’s petition on the grounds of failure to act in good faith. This is why it is advisable to consult with a hands-on bankruptcy lawyer who will help you before, during, and even after the formal bankruptcy proceeding.
A thorough review of all assets, disposable income, and finances is required before a bankruptcy filing can be approved. A debtor who files a bankruptcy petition must provide full disclosure of their financial status. Errors and failure to meet deadlines may contribute to denials. Intentionally misleading the court may also result in allegations of fraud. This can be very stressful.
Bankruptcy filings are necessary for individuals who wish to have a fresh start and rebuild their financial future. It is necessary to practice due diligence and consider legal help and assistance to make the most out of declaring bankruptcy. Contact us at E. Orum Young Law for a free case evaluation.