Bankruptcy may provide a fresh start while protecting your assets.
Find out if Bankruptcy is the right debt relief solution for you.
What documents will I need to provide for bankruptcy?
- Last 2 years tax returns.
- Last 6 months paystubs.
- Last 6 months bank statements.
- Retirement Account / Savings Statements.
- Mortgage & Car Loan Statements.
- Property List with values.
- Drivers License & Social Security Card.
- Credit Counseling Certificate
- Credit Report
- List of Creditors / Bills / Invoices
The Means Test In Bankruptcy
What is a Means Test?
The bankruptcy means test determines who can file for debt forgiveness through bankruptcy.
It takes into account your income, expenses and family size to determine whether you have enough disposable income to repay your debts. Although it was designed to restrict the number of debtors who can get their debts forgiven through a Chapter 7 bankruptcy, most people who take the means test pass it easily.
Those who don’t qualify for Chapter 7 or who want to retain certain assets — like a house or expensive car — can choose instead to restructure their debts and pay them off through Chapter 13 bankruptcy.
It determines what property you get to keep, whether it be your home, car, pensions, personal belongings, and/or other property after you file for bankruptcy.
We got the knowledge and experience to protect you and your assets.
What is bankruptcy, and will the process wipe out all of my debts?
After getting court approval, the court shields you from lawsuits and some other adverse actions while you work through the procedure. For consumers, bankruptcies are almost always either “liquidations” (Chapter 7) or “reorganizations” (Chapter 13). In a Chapter 7 proceeding, property may be sold (liquidated) to pay back creditors. In a Chapter 13 proceeding, consumers typically keep most of their property but must establish a plan to repay at least some of their debt within three or five years.
The court issues a protective order when you file for bankruptcy called an”automatic stay”, which stops most creditors from contacting you about your debts or making any collection efforts. Only the court has the authority to lift the automatic stay and allow creditors to seek repayment of debts.
Bankruptcy can help you get rid of some, but not all, kinds of debt. For instance, unsecured debt from credit cards and hospital bills may be forgiven in many cases. But child support, alimony and taxes may not be discharged. Student loans are not dischargeable unless the debtor can prove that repayment would cause an undue hardship (which is very difficult to prove). Also, creditors may argue that a given debt should not be discharged, subject to the bankruptcy judge’s approval.
What are the main differences between Chapter 7 and Chapter 13 bankruptcy?
Chapter 13 is called “reorganization” bankruptcy because it allows consumers to reorganize their debt burdens and payment schedules. Anyone filing for Chapter 13 must also propose a replayment plan showing your income and how you will pay off your debts. Working with the court, your plan will determine how much you need to repay, based on your income, debt load, and the value of your property.
How long does it take to file a case?
If you decide to retain our firm to assist you in filing for bankruptcy protection, we will be willing to accept phone calls from your creditors that you refer to our office. This will give you more or less immediate relief from the creditor calls.
If I file for Chapter 7 protection, what happens to my debts?
If one of your creditors holds a valid security interest in certain property, the creditor may seek to lift the “automatic stay” and then proceed against the collateral (by repossession, foreclosure, etc.). However, you usually can negotiate (preferably with the assistance of your attorney) with the creditor to buy back the property after the bankruptcy is completed. After all, the creditor probably would want your money instead of taking back your used property.
The process moves along with regard to your other debts until you receive what is called a “discharge.” The debts still exist, but your obligation to pay them is “discharged.” This means that creditors are permanently forbidden from trying to collect the debts from you or against your property.
Because the debts are not extinguished, any co-signers or guarantors on the debt are still liable, and the creditor may proceed against them.
Will the bankruptcy stop bill collectors from calling?
If a creditor continues to use collection tactics against you once it has been informed of the bankruptcy, it may be liable for court sanctions and attorney fees for such conduct.
Who is eligible to file under Chapter 7?
Recently, a ‘means test’ was added to the mix for Chapter 7 eligibility. Simply put, if you have sufficient money to repay a meaningful sum to your creditors over the next three to five years, you may not be allowed to continue in your Chapter 7 case. (And you should therefore consider filing a Chapter 13.) But there is a lot more to this ‘means test’ than meets the eye. It is quite a complicated formula. State and federal based average expenses for housing and transportation and food (as opposed to your personal actual expenses) must be used in detemining eligibility. The means test does not even apply if your current average monthly income for the last six months multiplied by 12 is equal to or less than the state’s median annual income. But even that (not so simple) statement is full of potential issues. What is ‘current monthly income’? What is the ‘state’s median annual income’ at any given time?
The resolution to all of these sometimes challenging issues go far beyond what we can possibly accurately set out in this kind of discussion. You should take specific questions regarding the ‘means’ analysis to an attorney experienced in bankruptcy for answers and guidance. That way, you can have better, and more personalized, information for making the decision regarding filing for bankruptcy protection.
Are taxes dischargeable?
What is the process for filing?
If you decide to file for bankruptcy protection, we will schedule a second appointment to review the paperwork you completed and begin filling out the extensive paperwork for the filing. After the attorney completes your petition/paperwork, you’ll need to carefully review and sign it. Accuracy is key, and you will sign the papers under penalty of perjury. So let’s make sure that everything is correct. The bankruptcy petition and schedules are filed with the bankruptcy court after you sign them.
The Court will schedule a hearing with a trustee and your potential creditors. Although creditors are invited to attend the hearing, they rarely do. We, of course, will be with you at the meeting.
At the hearing, the trustee will ask you questions about the accuracy of your filing, your present financial situation and may request additional information and documentation from you.
After the hearing, you must complete a “debtor education” course. (This is different from, and in addition to, the “credit counseling” course you took before the bankruptcy filing.) If you fail to take this course, your discharge will not be granted. Don’t worry — we will remind you of this requirement.
About three months from the date of filing, and assuming you have completed the “debtor education” course and no complications arose in your case (e.g., creditors haven’t filed claims to declare debts non-dischargeable, no property to surrender, etc.), and that you attended the required “debtor education” course, your case will come to an end. You will be granted your discharge in bankruptcy and a notice of this will be sent to you by the bankruptcy court.