What are the different types of bankruptcy?
There are three basic types of bankruptcy. Chapter 11, Chapter 13, and Chapter 7. Chapter 11 is generally for large businesses and allows them to pay their obligations over time. Chapter 13 is a similar type proceeding for individuals, allowing them to pay their debts over time and sf most helpful to people who are behind on their mortgages. Under the new bankruptcy law, many more individuals will be required to devote a portion of their debt through Chapter 13. In Chapter 7, debts, with certain are exonerated. The debtor is allowed to keep certain exempt assets.
What is means testing?
Under the 2005 revisions to the Bankruptcy Code, only certain individuals qualify for Chapter 7. If you are under the median income for your area you will qualify. If you are above the median income, qualification depends on the number in your household and the net amount existing after deduction of allowed expenses. For example mortgage payments are deductible. Payments on a yacht are not.
What is a discharge?
A discharge is a bankruptcy term which means that creditors can no longer institute legal action to collect their debts.
What assets can an individual who files bankruptcy keep?
What an individual can keep after filing bankruptcy depends on the nature and value of his or her assets. For the most part, the debtor will be able to keep a vehicle . If the debtor owns a home, a portion of its value will be protected. Retirement accounts can also be exempted under the new law up to $1,000,000.
What steps take place in a bankruptcy?
In any bankruptcy proceeding, the debtor must file extensive paperwork, disclosing all their assets and obligation under penalty of perjury. There also is a meeting of creditors in which creditors and a trustee will ask questions about the debtor’s finances. In Chapter 13 and Chapter 11 there is at a minimum a hearing to confirm the payment plan.
How long does bankruptcy take?
In Chapter 7, the meeting of creditors in scheduled about a month after the filing of papers with the court. The discharge is granted usually four months after the filing.
In Chapter 13 and 11 the meeting of creditors in scheduled about a month after the filing of papers with the court. Plans in Chapter 13 are five years. Plans in Chapter 11 vary in time and content.
What debts cannot be discharged?
Credit obtained by fraud, student loans ( with few exceptions), certain taxes, alimony.
Can tax obligations be discharged?
Most tax obligations can be discharged if criteria as to time and filing of tax returns are satisfied.