Bankruptcy Basics
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Chapter 7 bankruptcy is often referred to as personal bankruptcy. Individuals who have high amounts of debt and no means to pay their debts can file Chapter 7 bankruptcy. However, the bankruptcy law passed in 2005 has new Chapter 7 Bankruptcy Rules that must be followed in order for a bankruptcy to be discharged.

Before filing Chapter 7, you must pass the means test. If you do not pass this test, you do not qualify to file bankruptcy. The test was intended to prevent bankruptcy fraud. This test prevents individuals who have the income to pay their debts from filing bankruptcy as a means to avoid paying the debts.

If you pass the means test, the court requires you to get credit counseling from a court approved provider. This requirement must be met within 180 days before you file your bankruptcy case. The credit counseling provider will furnish a certificate of credit counseling that you must submit with a statement of compliance. This is a crucial rule that must be followed. If you fail to comply with this rule, your bankruptcy case may be dismissed and you may lose your right to file.

When completing the petition, you must include all assets such as property and income. In addition, you must list all debts you wish to include in the bankruptcy. If a debt is not listed in your petition, that debt will not be discharged. It is important to complete the petition accurately and provide all additional schedules and documents required by the court. Failure to do so may result in a dismissal or you may lose the right to file bankruptcy.

Many people are tempted to hide assets or falsifying records. If an individual commits a dishonest act when filing bankruptcy, the judge can deny the discharge of debts. Even an honest oversight can result in the dismissal of a bankruptcy case. It is critical that the petition is completed with utmost accuracy and honesty.

Once you file your petition and pay the filing fee, you will be given a case number, and you will be assigned a trustee. You may have to appear before the trustee, however, if you do not have assets it is unlikely this will happen. In addition, once you have a case number, your creditors will be notified that you have filed Chapter 7. Your creditors are barred from contacting you in attempts to collect on the debt. If you receive collection calls, simply advise the creditor or collection agency you have filed for bankruptcy. You can provide the caller with your case number.

The court will allow individual to keep assets within the state exemption law limits. However, all other assets must be liquidated to pay creditors. If an individual does not have any assets, the case is adjudicated quickly and the judge orders a discharge of debts.

When you appear before the court, you will be asked to state your name and address. If your documents are in order and you have met all requirements, the judge will issue the discharge on your debts. You will typically receive your discharge documents within 90 days.

Once the discharge has been issued, you are no longer responsible for the debts listed in your bankruptcy petition. However, your credit history will reflect you filed bankruptcy and it will remain on your record for 10 years.
The Chapter 7 Bankruptcy Rules must be followed stringently in order to avoid a dismissal of your case. While you are not required to hire an attorney, the Federal court strongly recommends you use the services of an attorney.

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Chapter 13 Bankruptcy Rules

Chapter 13 allows debtors to present a repayment plan for their debts. The debts are not discharged under Chapter 13, however, payments and interest can be reduced to allow the debtor to pay off the debt within three years. However, in some cases the court may approve a repayment plan up to five years. The Chapter 13 Bankruptcy Rules under the 2005 Bankruptcy law creates a paperwork nightmare that requires the expertise of an experienced bankruptcy attorney.

Individuals who file Chapter 13 are required to obtain credit counseling from an approved provider. The counseling must take place within 180 days prior to filing Chapter 13. The provider will issue a certificate of credit counseling which the debtor must submit to the court when filing his or her petition.

The debtor must submit a list of all creditors and the amounts each creditor is owed. The debtor must supply detailed information regarding monthly expenses. In addition, the debtor will have to submit a copy of the previous year’s tax return and current income information.

If the debtor is married and the spouse is not filing bankruptcy separately or jointly, the income and expenses of the non-filing spouse must be submitted to the court. The trustee and creditors will use this information to determine the financial position of the household.

Once the Voluntary petition is filed with the court, an automatic stay is initiated. This prevents creditors from contacting the debtor. In addition, if wages are being garnished, the garnishment is stopped. The bankruptcy clerk will give notice to all creditors listed on the petition.

The debtor is assigned a trustee who will set up the 341 meeting with the debtor and the debtor’s creditors. The purpose of this meeting is to allow the debtor to present a repayment plan. The trustee and creditors must agree upon the repayment plan. The repayment terms are typically between 3 and 5 years.

Once a repayment plan is agreed upon, the trustee, debtor, and creditors will appear in court. If the judge approves the plan, then the debtor will begin making a monthly payment to the trustee on the agreed upon date. The trustee will distribute the money to the creditors. If at any time you find you cannot make the payment, you must contact the trustee immediately.

Every Chapter 13 case will have a different set of circumstances. However, the Chapter 13 Bankruptcy Rules must be followed or the bankruptcy may be dismissed. The complexity of the law prevents debtors from filing Chapter 13 on their own. An attorney is not required, however, it is virtually impossible for the average person to understand and follow the bankruptcy rules.

Most attorneys will only provide an estimate for attorney’s fees on Chapter 13 cases. It is difficult for an attorney to determine how much work will be required to file the Chapter 13. The complexity will depend on the amount of debt and assets of the debtor.

The average attorney’s fee for a Chapter 13 is $1400. However, once you realize how complicated it is to file Chapter 13; you will agree the fee is worth it. While filing Chapter 13 will help you regain control of your finances, it is a difficult and challenging process. However, an experienced bankruptcy attorney will be adept in maneuvering through the obstacles of Chapter 13 bankruptcy.


The Importance Of Following Bankruptcy Rules

Many people have attempted filing bankruptcy without hiring an attorney. For some people it was the only way they could afford to file bankruptcy. Currently, the total filing fee for Chapter 7 is $299. The total filing fee for Chapter 13 is $274. For those who are struggling financially, it is difficult to pay the fees.

In addition, there is an additional cost for credit counseling. Individuals who wish to file bankruptcy must use a court approved credit counseling service. While most of the approved credit counseling service providers are non-profit agencies, they do charge a fee. For people who are struggling financially coming up with even the smallest fee is difficult.

Unfortunately, those who file bankruptcy without hiring an attorney, often have their case dismissed by the court. In many cases, the court dismissed the case because the Bankruptcy Rules were not followed. In some extreme cases, people have lost their right to file bankruptcy.

If you do not have the money to hire an attorney, you may have to postpone filing until you can save the money. Many people will wait to file bankruptcy until they receive a tax refund. If you believe you will receive a significant refund, you can hire an attorney as soon as you file your taxes. Your attorney will not file your bankruptcy until you pay the fee. However, you can you can provide the attorney will your financial information so the documents will be prepared and ready to file.

To save money, you can search for local attorneys who may offer a discount on their fees. Many less experienced attorneys will often offer discounts to gain clients. Unfortunately, most attorneys will not offer payment plans. Some attorneys will allow you to make payments until the fee is paid in full. However, the attorneys will not proceed with your case until payment is made.


Understanding State Bankruptcy Rules

The Bankruptcy law passed in 2005 is more complex than the previous bankruptcy law. The intent of the new law is to prevent bankruptcy fraud and to develop consistency how the laws are applied in the federal courts. Unfortunately, the 2005 law has made it more difficult for people to file their own bankruptcy. To compound the complexity, states have their own State Bankruptcy Rules for exempt assets.

You do not need to hire an attorney to file bankruptcy. However, most people quickly realize the law is too complicated. Many people become confused by the State Bankruptcy Rules. Each state has its own limits on certain assets that may be exempt when you file bankruptcy. For example, in most bankruptcy situations, individuals are allowed to keep a vehicle. However, states have limits on the value of the vehicle.
In many states, the exemption limit for a vehicle is as low as $3400 and as high as $10,200. For personal belongings, the range is just as significant. Some states allow $1500 limit for personal belongings such as jewelry. Other states may allow up to $4500 for personal belongings.

It is important to mention, you must file bankruptcy in the state where you reside. It is illegal to file bankruptcy in another state for the sole purpose of taking advantage of a more lenient bankruptcy exemption law.

The complexity of the new bankruptcy law makes it difficult and frightening for individuals to file their own bankruptcy. It is no surprise most people choose to hire a bankruptcy attorney. While hiring an attorney is the most expensive method of filing bankruptcy, it is also the easiest method. The attorney handles all documents associated with your case. The only thing you have to do is provide your attorney with your financial information including debts, income and assets. Your attorney will handle everything else.