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Chapter 7 Bankruptcy
Chapter 11 Bankruptcy
CHAPTER 13 BANKRUPTCY
DEBT COLLECTOR ABUSE
Overview:
Immediately upon filing a bankruptcy petition an ‘automatic stay” is entered prohibiting creditors from contacting you.
Bankruptcy law provides for the reduction or elimination of certain debts, and can provide a timeline for the repayment of nondischargeable debts over time.
Bankruptcy has a dedicated system of courts throughout the country. Each judicial district in the U.S. has its own bankruptcy court, while each state has at least one district (90 districts total).
United States bankruptcy judges have the authority to make binding decisions in bankruptcy cases, such as eligibility issues or whether to grant a debt discharge. However, most aspects of the bankruptcy process are done outside of the court. For example, an appointed trustee carries out the administrative duties of Chapter 7, Chapter 13, and other types of bankruptcy cases.
The debtor actually has very little interaction with the bankruptcy judge. Most Chapter 7 applicants don’t even set foot in court and only see the judge if there are objections to the bankruptcy plan. Chapter 13 debtors typically appear in court just once, at the bankruptcy plan confirmation hearing. The informal meeting of the creditors (also called a “341 meeting,” based on Section 341 of the Code) is typically held at the trustee’s office.
Bankruptcy’s Main Goal
Federal bankruptcy laws are intended to allow debtors a way out of particularly heavy debts, giving consumers and businesses a fresh start where all other options have failedThe bankruptcy discharge, a court order releasing the debtor from personal liability for certain debts, is the main way this is accomplished. The discharge also prohibits creditors or collections agencies from communicating with debtors.
Chapter 7
Chapter 7 bankruptcy is a liquidation proceeding available to consumers and businesses It’s the quickest, simplest and most common type of bankruptcy. More than 60% of bankruptcy cases filed were Chapter 7. An encouraging statistic is that 95.5% of Chapter 7 filings had their debts discharged. Those assets of a debtor that are not exempt from creditors are collected and liquidated (reduced to money), and the proceeds are distributed to creditors. However, Nevada has generous exemptions and most filers keep all of their property.
A consumer debtor receives a complete discharge from debt under Chapter 7, except for certain debts that are prohibited from discharge by the Bankruptcy Code. There is a “means test” based on your income to file a Chapter 7 bankruptcy. The means test examines financial records, including income, expenses, secured and unsecured debt. If your income is too high you will have to file under Chapter 13.
Note that Chapter 7 generally won’t relieve you of student loan debt or obligations to pay alimony and/or child support. There are also time limits prohibiting receiving a Chapter discharge for 8 years from the date of a previous filing.
Chapter 13
Chapter 13, often called wage-earner bankruptcy, is used primarily by individual consumers to reorganize their financial affairs under a repayment plan that must be completed within three or five years. To be eligible for Chapter 13 relief, a consumer must have regular income and may not have more than a certain amount of debt, as set forth in the Bankruptcy Code. While the plan is in effect, the debtor is shielded from wage garnishments, lawsuits, and other creditor or collections actions. Additionally, debtors may be able to eliminate more debts under the Chapter 13 discharges.