Bankruptcy & Debts
Who can file for bankruptcy?
Any person, partnership, corporation or business trust may file bankruptcy. In addition, charitable or social organizations may also file for bankruptcy. United States citizenship is not a requirement for filing bankruptcy.
Will I lose my house, car, and other personal property?
Not necessarily, each state has laws that determine which items or property are exempt from being taken away. For example, Georgia exempts personal items such as basic furniture and clothing (antique furniture and expensive designer clothing can be an exception). In addition, other kinds of property are exempt up to a limit. These exemption limits mean that any equity that you have in the property above the exemption limit is not exempt. The Bankruptcy Court can take the property and sell it, pay off any creditors, give to you the exemption amount, and keep the rest for other creditors.
Will filing bankruptcy affect my credit rating?
Unfortunately it will. However, most individuals are able to rebuild their credit within a few years. If you are currently contemplating bankruptcy, then it is likely that your current credit rating has already been affected. A discharge of your current debt may provide the opportunity to rebuild your credit with steady, regular payments on a new account.
How long will a bankruptcy show on my credit reports?
The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove Chapter 11 and Chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters.
Can I file for bankruptcy every few years?
No. Once a discharge is granted, a debtor who filed under chapter 7 or 11 is prohibited from filing for another 6 years. A debtor who files under chapter 13 is limited to 3 filings. In addition, a Chapter 13 debtor is prohibited from filing for 6 months, if the Bankruptcy Court has dismissed the case, due to certain actions or inactions of the debtor, or due to an adversary action filed by a creditor. This means that a Chapter 13 debtor cannot file another Chapter 13 immediately in order to avoid foreclosure on a house.
What chapter should I file under?
Your particular circumstances will determine the best chapter for you to file under. Choosing the appropriate chapter is very important. The decision whether to file a bankruptcy, and under what chapter, is an extremely important decision and should be made only with competent legal advice from an experienced bankruptcy attorney after a review of all the relevant facts concerning your case.
What is a chapter 13 bankruptcy?
Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan that must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
What should I do if I cannot make my chapter 13 payments?
If the debtor cannot make a chapter 13 payment on time according to the terms of the confirmed plan, the debtor should contact his attorney. The attorney will contact the trustee by phone and by letter advising the trustee of the problem and whether it is temporary or permanent. If it is a temporary problem and the payments can be made up, the debtor should advise his attorney of the time and manner in which the debtor will make up the payments. Significant changes in the debtor's circumstances may require that the plan be formally modified. If the problem is permanent and the debtor is no longer able to make payments to the plan, the trustee will request that the case be dismissed or converted to another chapter. The determination of whether to modify, dismiss or convert a case requires the same kind of analysis as is needed for the initial decision whether to file bankruptcy and under what chapter. Therefore, the debtor should seek counsel from a qualified bankruptcy attorney before attempting to make such a decision. If the debtor delays making a voluntary decision and cannot make the plan payments, the court may dismiss the case.
What is a chapter 7 bankruptcy?
Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy.
Where can I get advice about bankruptcy?
The best course of action is to schedule an appointment with an attorney who practices within the area of bankruptcy. Many attorneys provide an initial consultation for little or no money. You should not rely on the information you get from a book or website when it comes to such an important decision.
What can I do if a creditor keeps trying to collect money after I have filed bankruptcy?
If a creditor continues to attempt to collect a debt after the bankruptcy is filed in violation of the automatic stay, you should immediately inform your attorney. He will notify the creditor in writing that you have filed a bankruptcy. If the creditor still continues to try to collect, the debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action. Further, if the creditor is willfully violating the automatic stay, the court can hold the creditor in contempt of court and punish the creditor by fine or incarceration. Any legal action brought against the creditor will be complex and will normally require representation by a qualified bankruptcy attorney.