One of the toughest decisions you could be faced with is that of filing for bankruptcy or not. For individual persons, there are essentially two types of personal bankruptcy, which include Chapter 7 and Chapter 13. Designed to provide the file launcher a new start in life by wiping out certain debts, the Chapter 7 bankruptcy plan would rid the file launcher of credit card and other unsecured debts. The Chapter 13 bankruptcy, on the other hand, refers to a payment plan approved by the court, where the filer is expected to pay in a predetermined percentage of their debt. Determining which chapter to file under will be based on the filer’s available income, if any, after paying their required monthly bills.
When many people declare bankruptcy, their first thoughts are on their assets and uncertainty about whether or not they could lose their homes. In a Chapter 13 repayment plan, the vast majority of filers are permitted to keep their property in exchange for reimbursement of a portion of their debt. A chapter 7 plan, however, is designed to be a settlement process, often resulting in sales of non-exempt property. What property is considered non-exempt in bankruptcy procedures? Each State has its own laws regarding the amount of property a married couple or single person may keep without having to bother about its liquidation.
The conventional bankruptcy process begins by filing a petition before the competent local court. This could be done individually, also referred to as pro Se or with the assistance of a lawyer. For most people, the best way is to hire a lawyer to ensure that all forms are filled out correctly and to ensure that their assets are protected as much as possible. After filing of a bankruptcy petition, the court assigns a trustee to the case and sets a date for a meeting of creditors. Although the filer’s creditors are invited to participate, they are not obliged to do so. The filer is however required to attend and will be questioned by the competent authority, under oath, while the meeting is recorded. This meeting is usually the only necessary one for the filer, unless special circumstances warrant otherwise.
After the meeting of creditors, known as the 341 meeting, the said creditors will have 30 days to object to the filer’s property exemptions request and an additional 30 days to object to the discharge if the request falls under a Bankruptcy Chapter 7 plan. In a Chapter 13 procedure, creditors could oppose the payment plan, but discharge will not be issued until the payment plan is completed. A Chapter 13 bankruptcy plan could last up to 5 years before payments are completed and discharge issued. After a bankruptcy case is closed landfill, and the process is completed.
This article should serve for information purposes only. It may not be used as, in place of or together with professional legal advice on bankruptcy. Anyone considering submitting an application for personal or business bankruptcy would do well to consult a licensed attorney in their area for further information and/or legal advice.
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