The process of filing a Bankruptcy Petition should begin with the contacting of an attorney to determine the eligibility of the individual and then if eligibly, what type of bankruptcy is most appropriate. We at the Family Law Center concentrate on assisting individuals with "consumer" bankruptcy and go to great lengths to provide you with courteous, respectful information and support in a dignified manner during this time of family upheaval.
What is bankruptcy?
Bankruptcy is a process by which a debtor can obtain relief from his debts, through the courts. This relief may come in a variety of forms, including full or partial discharge of the debt, or the imposition of a payment program consistent with the debtor's financial means.
The most common types of bankruptcy are:
Chapter 7 ("Straight Bankruptcy" or "Liquidation")
When people think of bankruptcy, they have traditionally thought in terms of "Chapter 7" personal bankruptcy. In a "Chapter 7" bankruptcy: A trustee is appointed to oversee your property; Some of your assets will likely be surrendered to the trustee, who will sell them to pay your creditors; Depending upon the laws of your state, you will be allowed to keep some personal property, and probably an interest in your home (although perhaps not all of your equity). Most debts are cancelled.
There are now also income restrictions on who will qualify for a Chapter 7 discharge, effective as of October, 2005. Assuming those restrictions do not apply, you will most likely be unable to file a "Chapter 7" bankruptcy if you have filed and dismissed a "Chapter 7" petition in the last 180 days, or if you were granted or denied a "Chapter 7" discharge in a prior case within the past six years. You should discuss your case with an attorney, as you may qualify for an exception.
This is primarily used by businesses. Although it is available to individuals, the increased cost and complexity of "Chapter 11" bankruptcy makes it undesirable for most people. Most "Chapter 11" petitioners owe debt in excess if the "Chapter 13" limits. This form of bankruptcy allows a business to remain in operation, while sheltering it from some of its debts.
Chapter 13 ("Wage-Earner Bankruptcy")
In a "Chapter 13" Bankruptcy:
You will propose a repayment plan for your debts; If approved by the court, a trustee will be appointed to collect your payments, distribute them to your creditors, and to supervise your compliance with the repayment plan.
You will have to pay the trustee's fee, which can be substantial. Debtors whose debts exceed certain limits are barred from seeking Chapter 13 bankruptcy. (At the time of this writing, in order to file a "Chapter 13" bankruptcy, you must owe less than $269,250 in noncontingent, liquidated, unsecured debts, and less than $807,750 in noncontingent, liquidated, secured debts. You will most likely be unable to file a "Chapter 13" bankruptcy if you have filed and dismissed a "Chapter 13" petition in the last 180 days, and should discuss any prior filing with your attorney. You should also take care to propose a reasonable budget, as most debtors find themselves unable to comply with the strict enforcement of their "Chapter 13" plans, and end up dropping out of bankruptcy before their plan is completed.
This type of bankruptcy can be particularly useful when a debtor believes that his financial crisis is temporary, and that his income will continue to grow in the future. Corporations and partnerships cannot file a "Chapter 13" bankruptcy.
A so-called "Chapter 20" bankruptcy is the process filing of a "Chapter 7" bankruptcy to discharge unsecured debts, followed by a "Chapter 13" bankruptcy to allow the debtor to catch up on mortgage payments. The 2005 Bankruptcy Reform Act attempts to limit "Chapter 20" bankruptcies by imposing limits on the filing of successive bankruptcies. Under current bankrupcy law a Chapter 13 bankruptcy may be filed only once every two years, and three years must pass after the filing of a Chapter 7 bankruptcy before a Chapter 13 filing. Some debtors attempt to circumvent this restriction by filing for Chapter 13 protection while the Chapter 7 petition is still pending. That option is not available in all courts. In a "Chapter 20" bankruptcy, debtors should be aware that missing even one mortgage payment after filing the initial "Chapter 7" petition may cost them their ability to save their home in a subsequent "Chapter 13" filing.
After you declare bankruptcy, an "automatic stay" of your debts takes effect. Your creditors will be served with notice of the bankruptcy, and, after receiving notice, will be barred from taking certain actions against you while the bankruptcy is pending.
If you are contacted by a creditor after filing for bankruptcy, tell your attorney -- it is important that your attorney know not only of improper contacts, but of any possibility that a creditor was omitted from the list of creditors you submitted with your bankruptcy petition, or of the possibility that notice was not properly served.
If a creditor is intentionally violating the automatic stay, your attorney can bring their misconduct to the attention of the bankruptcy court.
The FAMILY LAW CENTER only performs Chapter 7 Bankruptcies. In most every case, we can prepare a Chapter 7 bankruptcy petition for $1,000.00 this DOES NOT include the $299.00 filing fee. Of course this price may vary depending on the complexity of the case. Please consult this office for an appointment or a pho9ne consultation to evaluate your case.