What Types Of Bankruptcy Are There?

For individual debtors there are four types of bankruptcy proceedings available: Chapter 7, Chapter 11, Chapter 12 and Chapter 13. Chapter 11 is very expensive
and rarely more advantageous to a client as compared to Chapter 13. Chapter 12 is for family farmers and fisherman. They are not discussed in this overview.
Explanations of Chapter 7 and Chapter 13 are set out below.

Who Can File Bankruptcy?

An individual, a partnership or a corporation may file a Chapter 7 bankruptcy.Only individuals may file a Chapter 13 bankruptcy. The information contained
herein is for the individual debtor. If you are married you can file by yourself or file a joint petition with your spouse. If you have filed a bankruptcy petition that you voluntarily dismissed in the last six months, depending on the circumstances of the dismissal, you may not be able to file until six months from the date of dismissal has elapsed.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, also known as "liquidation," is a legal process by which most unsecured debts can be discharged, or wiped out. Chapter 7 bankruptcy is known as liquidation because any non-exempt assets the debtor has may be liquidated (sold) by the trustee for the benefit of creditors. Many Chapter 7 bankruptcy debtors have no non-exempt assets, and so there is no liquidation, and unsecured debts are simply discharged. There are, however, certain unsecured debts that are not dischargeable in Chapter 7 bankruptcy.

Can I File Chapter 7 Bankruptcy?

To file for Chapter 7 bankruptcy, you must qualify under the Chapter 7 means test. The means test first compares your income to the median income in your state. If your income is lower than the median income in your state, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income in your state, other calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.

Is Chapter 7 Bankruptcy the Right Option for Me?

Chapter 7 bankruptcy can eliminate debt under the U.S. Bankruptcy Code.Chapter 7 bankruptcy may be a good option for people who are facing lots of unsecured debt, such as medical bills or credit card debt and have few assets.Among other benefits, filing Chapter 7 bankruptcy may:eliminate most or all of your unsecured debt, allowing you to rebuild your credit;eliminate your unsecured debt through a Chapter 7 debt discharge;silence your creditors through an automatic stay order;

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a full or partial repayment plan administered by the bankruptcy court. The debtor submits a plan for approval and, when a plan is approved, makes monthly payments to the bankruptcy trustee. The trustee makes payments to creditors in accordance with the terms of the plan. The repayment period may be from 3-5 years. At the end of the repayment period, if all payments have been made according to the plan, remaining unsecured, dischargeable debt may be discharged.

Who Can File Chapter 13 Bankruptcy?

In one sense, it's easier to qualify for Chapter 13 bankruptcy than for Chapter 7 bankruptcy. There's no means test for Chapter 13 bankruptcy, and some debtors who cannot qualify for Chapter 7 bankruptcy opt to file under Chapter 13 bankruptcy instead. However, Chapter 13 bankruptcy requires a regular income that will allow you to create a budget and make predictable and reliable payments to the trustee.

Is Chapter 13 Bankruptcy the Right Option for Me? A Chapter 13 bankruptcy can stop mortgage foreclosure and other repossessions.Chapter 13 bankruptcy is often a good option for people who are facing short-term financial setbacks, such as a job loss or illness. It also may be a good choice for someone who is suddenly faced with unexpected expenses.In short, a Chapter 13 repayment plan can silence creditors through an automatic stay and give a person the chance to repay their debts in three to five years after the bankruptcy filing.

Is Chapter 7 or Chapter 13 Bankruptcy Better?

The answer to this question depends on your specific circumstances. Generally speaking, Chapter 7 bankruptcy is better for people who have a lot of unsecured debts, like credit card debt and medical bills. If you don't have much property, your income is low, and most of your debts are unsecured, you might want to consider Chapter 7 bankruptcy. Chapter 13 bankruptcy, on the other hand, tends to be a better option for those who have regular income and non-exempt property they'd like to keep. A local bankruptcy attorney can review your specific financial circumstances and advise you as to which type of bankruptcy protection might be best for you.

How Do I Choose a Personal Bankruptcy Lawyer?

Deciding to file bankruptcy is a major decision. You'll want to be advised by a bankruptcy lawyer who knows the bankruptcy law "in and out"—especially if you have assets that you want to protect from seizure.When looking for a bankruptcy attorney, it's a good idea to select a lawyer who specializes in just that area of law. Bankruptcy laws also vary from state to state, so a local bankruptcy lawyer could be of great assistance to you. You'll also probably want someone who is upfront, honest and can help guide you through the whole bankruptcy process
 
Does the New Bankruptcy Law Affect Me?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed by Congress and signed into law by President George W. Bush on April 20, 2005. Since then, there have been various amendments and exemptions to the law.

Although this new bankruptcy law has prevented some people from being able to file bankruptcy, most people are not turned down from filing bankruptcy protection.

The biggest change the BAPCPA brought was that now there are additional bankruptcy requirements for people seeking bankruptcy (like the debtor education course and credit counseling briefing). A debtor must complete the requirements in order to have a successful bankruptcy.

Will Filing Bankruptcy Affect My Credit?

Bankruptcy can be an effective way to regain control and tackle mounting debt. Many people find that their credit scores improve not too long after they file bankruptcy.You're credit will likely be affected if you decide to file bankruptcy—but that's not necessarily bad news! Many people who decide to file bankruptcy don't have the greatest credit to begin with and they find that once their debt is relieved, their credit score starts to improve. But you should also know that most types of bankruptcy will stay on your credit report for a period of at least ten years. (In some cases, the time period can be reduced.) During that time, it may negatively affect your credit.But bankruptcy can also provide you with a chance to "start fresh" and rebuild your credit. Keep in mind that how your credit will be affected will depend on a number of factors, such as where your credit level is at today and which type of bankruptcy you file.

Can Co-Signers Be Protected In Bankruptcy?

Co-signers can be protected in certain bankruptcies. If you are concerned about protecting your co-signers, a bankruptcy lawyer may be able to help you determine which bankruptcy filing is best for you.In general, if you decide to file Chapter 7 bankruptcy, creditors are still able to proceed with collection efforts against your co-signers—even if you were let off the hook for the debt. However, if you file Chapter 13 bankruptcy, a co-signer is protected if the following provisions are met:

• the debt must be a consumer debt;

• the debt can't be incurred in the ordinary course of business;

• the co-signer can't benefit from the proceeds of the debt; and

• the debtor sticks to the Chapter 13 bankruptcy payment agreement.

You should note that if you fail to complete the requirements of your Chapter 13 repayment plan, the creditors have the legal right to pursue your co-signers.It's important that you choose a qualified bankruptcy lawyer to handle your case—especially when third parties such as co-signers are involved.

What Effect Will Bankruptcy Have On Someone Who Co-Signers A Loan With Me?

Another person who is jointly liable with you on a debt is known as a "co-debtor". When you file bankruptcy the co-debtor remains liable on the debt, unless the
co-debtor is your spouse and you file a joint petition. If the co-debtor fails to maintain the payments on the debt, the failure to pay the debt will adversely
affect his or her credit.In a Chapter 7 case the creditor is free to pursue collection from the co-debtor immediately. In a Chapter 13 case the creditor may be prevented from collecting from the co-debtor during the term of the Chapter 13 Plan. If you file a Chapter 13 and the status of a co-debtor is important to you, we will need to discuss the circumstances of the debt in order for me to advise you of the likely impact on the co-debtor. It may be possible to put the debt in a special class to be paid in full to protect the co-debtor from collection activities.

What is a Debt Discharge?

Under Chapter 7 bankruptcy, a debt discharge eliminates debt.That's right—the Chapter 7 debt discharge releases a debtor from personal liability for his or her debts. That means that the debtor never has to pay those debts off.There are requirements to who may be eligible to file Chapter 7 bankruptcy. A bankruptcy lawyer may be able to help you decide if you qualify for Chapter 7 bankruptcy and if it's the right debt solution for you.

How Can I Stop Creditor Harassment?

We don't have to tell you that creditors can be annoying.But we can tell you that you may have the power to silence them.If you decide to file bankruptcy, you can silence your creditors and reclaim your phone, voicemail and mailbox. This is because a bankruptcy filing results in an automatic stay order, which makes it illegal for creditors to attempt to collect on your debt.

What Happens If A Credit Or Has Collateral Securing The Payment Of Debt?

A secured debt is simply a debt in which the creditor has a lien on some item of property to "secure" your payment of the debt. The most common types of secured debts are a mortgage on a home and a lien on a car. Before bankruptcy,a secured creditor has two avenues of recovering its debt. First, it can recover by repossessing and selling the collateral. Secondly, it can recover from you on your personal liability. The Chapter 7 discharge eliminates the creditor's right to recover from you personally, but does not abolish the creditor's right to take and sell the collateral if you fail to make your payments. Application of this basic principal leaves you with the options set out below.

Is It Possible To Be Denied A Discharge Of All My Debts?

You can be denied a discharge if the Court determines that you committed any of the following acts:

1. You have been granted a discharge in a prior Chapter 7 bankruptcy filed less than eight years ago prior to the filing the current bankruptcy.

2. You have been granted a discharge in a prior Chapter 13 bankruptcy filed within six years of the current bankruptcy.

3. With the intent to delay or defraud a creditor or the bankruptcy court, you transfer, destroy, or conceal property within one year prior to filing Bankruptcy or at any time after filing bankruptcy.

4. Without justification, you conceal, destroy, falsify, or fail to keep books,records and documents related to your financial condition and business
transactions.

5. You knowingly and fraudulently in the bankruptcy proceeding:

    a. make a false oath, claim or account (i.e., lie about your property, debts, or financial affairs);

    b. give or receive money for taking certain action or agreeing not to take certain action;

    c. withhold books, records, documents or other records from the bankruptcy court;

6. You fail to explain satisfactorily any loss of assets or deficiency of assets to meet your liabilities;

7. You refuse to obey an order of the bankruptcy court, or refuse to answer a material question.

8. You fail to complete an instructed course in personal financial management following the filing of the case.

9. There is pending any proceeding in which:

    a. you may be found guilty of a felony;
   
    b. you may be liable for a debt arising from the violation offederal or state securities laws; or

    c. you may be liable for a debt arising from any criminal act, intentional tort, or willful or reckless misconduct that caused serious physical injury or death to another individual in the proceeding 5 years.

What Should I Do If I Owe Money To My Bank Or Credit Union?

If the bank or credit union at which you have checking or savings accounts is also a creditor (i.e. you have a loan, credit card account, or overdraft protection with the bank), then it is possible that the bank will put an "administrative freeze" on the funds in the account on the date the bankruptcy petition is filed.Such an administrative freeze will cause checks that have not cleared the bank to bounce. Therefore, you should open a new bank account with a bank that you do not owe any money prior to filing bankruptcy and cease checking activity in the old account several weeks prior to filing the petition. It is not necessary that you close the old account, but you should remove all but a few dollars from the account.If your paycheck is automatically deposited to the account, you do not necessarily have to change the deposit. Funds that are deposited into the account after you file the bankruptcy cannot be frozen.

Do I Have To Do Debt Counseling Before I File Bankruptcy And After I File?

You are not eligible to file a bankruptcy unless you receive an individual or group briefing from an approved nonprofit budget and counseling agency. That riefing must outline your opportunities for available credit counseling and assist you in performing a related budget analysis. It must occur within 180 days prior to your filing bankruptcy. It can take place on the internet or by phone. We refer our clients to a local credit counseling service that provides the counseling on the internet at a cost of $34.00 per case. They bill us for the services and you reimburse us. If you do not have access to the internet, we will provide access at our office.You must also complete an instructional course in personal financial management after to file bankruptcy as a condition of your discharge. In Chapter 13 cases this course is provided by the Chapter 13 trustee as part of his services. In Chapter 7 cases, the course is obtained on-line at a cost of $8.00 per person.

What Happens After The Bankruptcy Petition Is Filed?

As explained earlier, the filing of the petition serves as an automatic order to all creditors to stop any collection activity. The Bankruptcy Court notifies the creditors that you have filed bankruptcy. In a Chapter 13 the following requirements are imposed on you:

1.You make the first plan payment on the first day of the month after the petition is filed and all subsequent payments required by your plan.

2.You must maintain collision insurance on any vehicle less than 7 years old and on which there is a lien.

3.You may not dispose of any non-exempt property worth more than$5,000 without approval of the trustee and an order of the court.

4.You may not purchase additional property or incur additional debt in excess of $5,000.00 without approval of the trustee and an order of the court.

A hearing called a "341 creditors meeting" is conducted between 20 and 40 days after we file the petition. For residents of Wake, Johnston, Harnett, Franklin, ranville and Vance counties the hearing is held on the 6th floor of the BB&T building in downtown Raleigh. In Chapter 13 cases the debtor education classin onducted in the morning and the 341 creditors meeting is in the afternoon. It is mandatory that you appear at both the class and the hearing in Chapter 13 cases and at the hearing in Chapter 7 cases. We will appear at the hearing with you as your legal counsel. At this hearing the bankruptcy trustee will ask you a few questions under oath about your case, which usually takes less than five minutes. Creditors are also permitted to ask you questions at the hearing. however, in most cases they do not appear. Your case will be set for hearing at the same time as 50 or 80 other cases, so you could be at the hearing from one hour to eight hours, depending upon when your case is called. Plan to take the whole day off from work. In Chapter 7 cases, unless there is something unusual about your case, you will not have to appear for any other hearings after the 341 creditors meeting. You will be given your discharge approximately 70 days after the hearing.

What Effect Will Bankruptcy have On My Credit?

There is no absolute answer to this question. Any blanket statement such as, "If you file bankruptcy, you can't get credit for seven years," is not correct. When you apply for credit, each creditor makes its own decision as whether to extend credit or not. The fact that you have filed bankruptcy is obviously a factor that a creditor is going to consider along with other facts such as your income and the value of any security collateral.

Many creditors rely upon credit ratings from credit bureaus in making a decision to extend credit. The Fair Credit Reporting Act in general requires a credit
bureau to delete adverse information from your file after seven (7) years.However, bankruptcy information remains on file for ten (10) years after you file
the petition.Some relative statements can be made:

1. We used to believe that a successfully completed Chapter 13 proceeding has a smaller negative impact on your credit than a Chapter 7, because your creditors
receive some payment on their debts. However, we now believe Chapter 7 may have less negative impact. In a Chapter 13, under our local bankruptcy rules,
you cannot incur any debt in excess of $5000.00 without the approval of the court. Therefore, during the 3-5 years of the Chapter 13 plan you can do little to
reestablish your credit. By contrast a Chapter 7 is over in 3 to 4 months, and you can begin taking steps to reestablish credit immediately. You cannot get a
second discharge on any new debts in a Chapter 7 bankruptcy case filed within 8 years of the first case. Strangely enough, this fact, in combination with the fact that most or all of your debts have been erased, make you a good credit risk in the eyes of some creditors.

2. In the long run a bankruptcy may improve your ability to obtain credit. If you are in a situation in which you have accumulated more debts than you will ever be able to pay, then you may never be able to re-establish your credit absent some sort of debt relief. By wiping the slate clean with bankruptcy, you put
yourself in the position to eventually re-establish your credit.

3. Our personal opinion is that too many clients are concerned with their ability to incur more debt in the future, when their focus should be on the best way to deal with their existing debts. Our advice is to get your current debts under control before concerning yourself with more credit.

Can I Be Discriminated Against In Areas Other Than Credit If I file Bankruptcy?

The federal, state, county, or municipal government may not discriminate against you with respect to the issuance of a license or permit because you have filed bankruptcy. No employer, government or private, can lawfully terminate your employment or discriminate with respect to your employment as a result of filing bankruptcy.Utility companies (power company, telephone company, etc.) are put in a separate category than other creditors. They cannot discontinue service to you or refuse to provide you service because you file bankruptcy. They can require you to pay a reasonable security deposit for the payment of future service. Pursuant to regulation of the North Carolina Utilities Commission security deposits may be set at an amount equal to twice the average monthly bill. Finally, you may not be discriminated against in obtaining a future student loan on the grounds that you have filed a bankruptcy.