Unfortunately, you might run into debt problems that can become unmanageable.
This could be a result of loss of a job or a failing business, a disabling
injury, marital problems or divorce, a combination of these factors, or
other reasons beyond your control. Sometimes debt problems can be resolved
with creditors, but if they become overwhelming often your only option
is to consider bankruptcy.
The United States Bankruptcy Code is the federal law which governs all
bankruptcy matters. While federal law also regulates the procedures and
the forms used in bankruptcies and are the same in every state, state
laws play a role in determining property rights and so treatment of property
in bankruptcy can vary from state to state.
Bankruptcy cases are filed in United States Bankruptcy Courts across the
county and attorneys need to be specifically admitted to practice in these
courts to represent persons filing for bankruptcy or creditors seeking
to have their rights protected. The court assigns a trustee to oversee
the bankruptcy and the trustee is compensated out of assets of the bankruptcy estate.
Normally an individual will file either a Chapter 7 or a Chapter 13 bankruptcy.
If you meet specific income requirements, you may file for a Chapter 7
bankruptcy, called liquidation. This kind of bankruptcy allows the trustee
take over assets, reduce the assets to cash, and make payments to creditors.
Depending on your income, you may receive a discharge that allows you
to be completely forgiven from paying back some of your debt. Not all
debts, though, can be discharged. Child support, criminal restitution,
and most student loans cannot be discharged.
You can only file for a Chapter 7 if you meet specific income requirements.
If these requirements are not met, then you must file a Chapter 13 bankruptcy,
called reorganization. This kind of bankruptcy is used when you have some
regular source of income and can enter into a repayment plan that will
take place over a three to five-year period. In a Chapter 13 reorganization,
you can keep your home and other valuable assets. You do not receive an
immediate discharge of debt and will only receive a discharge if payments
are made through the repayment plan. During the repayment plan period,
you are protected from lawsuits, garnishments, and other creditor actions.
While Chapter 7 and Chapter 13 bankruptcies are the most common, there
are other kinds of bankruptcies available. A Chapter 11 bankruptcy is
typically used by financially struggling businesses to reorganize their
affairs. A Chapter 12 bankruptcy allows farmers and fishermen who have
a “regular annual income” to enter into a repayment plan similar
to that in a Chapter 13 reorganization but has some unique provisions
that take into consideration the specific needs of farmers and fisherman.
When you file for Chapter 7 or Chapter 13 bankruptcy, the automatic stay
provisions of the Bankruptcy Code immediately go into effect. The automatic
stay prohibits most creditors from continuing with collection activities,
which can provide relief to debtors as well the opportunity to regroup
during bankruptcy. This means you may be able to obtain at least temporary
relief from collection of private or tax debt, wage or bank account garnishment,
property foreclosure or eviction, and utility disconnection. However,
there are some exceptions to the automatic stay, so it's important
to learn about these before you file. Also, creditors can ask the bankruptcy
court to remove the stay and permit collection activities to move forward,
and in certain circumstances the court is likely to do so.
Our bankruptcy attorneys can provide legal advice and help you with your
bankruptcy case. They will help decide if there are any options to bankruptcy
and, if not, which kind of bankruptcy to file. They will work to make
the process easier and help you with any difficulties that arise while
you are filing bankruptcy. Also, there are many consumer problems that
arise during bankruptcy and after bankruptcy. You may have problems with
debt collectors or a problem with items that appear on your credit report.
If you are facing problems on these issues or other consumer-related problems,
our bankruptcy or consumer attorney to help you deal with these problems.