Bankruptcy – Frequently asked questions
- What is Bankruptcy?
- Who can file a bankruptcy?
- What do I need to begin the bankruptcy process?
- What is a joint petition?
- Different chapters in bankruptcy?
- What chapter is right for me?
- Will bankruptcy stop garnishment or lawsuits?
- Will filing for bankruptcy stop harassing phone calls?
- Will filing bankruptcy stop foreclosure?
- How long does a bankruptcy stay on my record?
What is Bankruptcy?
Bankruptcy is a legally declared incapability or mutilation of ability of an individual or organization to pay its creditors Bankruptcy refers to a federal code of laws and set of rules which is designed to Help a debtor, whether an individual or a business. Bankruptcy permits the debtor to work out a plan to repay some or all of the debt, or to have some of the debt forgiven.
Who can file a bankruptcy?
Generally, anyone can file for bankruptcy. If you simply cannot afford to pay your bills, you can be eligible for bankruptcy, either Chapter 7 or Chapter 13. If you have filed in the past, it could influence the options that may be available to you. For instance, if you have previously filed for a Chapter 7 bankruptcy, you cannot file another Chapter 7 for eight years. You will not be allowed to file for bankruptcy to defraud creditors. There are documentation requirements. You will need to produce personal tax returns, proof of income for six months prior to filing, and an official document showing that you took a mandatory credit counseling class.
What do I need to begin the bankruptcy process?
Accumulate a list of past and present debts as well as a schedule, or list, or assets and liabilities. You’ll also need a statement of financial affairs to file with the bankruptcy court in addition to you filing fee.
What is a joint petition?
A joint petition is the filing of a single petition by an individual and the individual’s spouse. Only people who are married may file a joint petition. Unmarried persons, corporations and partnerships must each file a separate case. If you are an individual and have a business which is not a partnership, corporation or business trust, you should list the business as a “dba” (doing business as) on your petition. However, yours will not be considered a joint petition because the business is not an independently-recognized legal body.
Different chapters in bankruptcy?
There are different chapters of the Bankruptcy Codes under which an individual can file, and they are called: Chapter 7, Chapter 11, Chapter 12, Chapter 9 and Chapter 13
Chapter 7: It is called a “straight” bankruptcy, or liquidation. In Chapter 7, a court-appointed trustee sells your non-exempt property and distributes the proceeds amongst your creditors.
Chapter 11: It permits reorganization under the bankruptcy laws of the United States. It is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate bodies
Chapter 13: is also known as restructuring where you file a repayment plan with the bankruptcy court proposing how you will repay your defaults to your creditors. The amount of money you’ll have to repay depends on how much you earn, the amount of debt you owe, the types of debt you have, and how much property you own. You don’t have to hand over any of your assets to discharge your debts, but you must make use of your income to pay off your debts over the due course of time it’s usually three to five years, depending on the amount of your debts and your income
Chapter 9:It is only for municipalities and government bodies.
Chapter 12: bankruptcy is for farmers and fishermen. First, the farmer’s debts may not exceed $1.5 million U.S. Dollars (USD), and at least 80% of this debt must be related to farming. Debt owed on a home is not computed as part of this total unless it is directly connected to the farming business. The law also requires that a farmer who files for chapter 12 Bankruptcy must have earned at least half of his gross income from farming in the year before the filing. In addition, the farmer must make a sufficient income to be able to make payments before the bankruptcy petition is granted.
What chapter is right for me?
You have a choice in deciding which chapter of the Bankruptcy Code will best for your needs. The decision whether to file a bankruptcy, and under which chapter to file depends on the particular situation of the debtor. In general, chapter 7 is appropriate when the debtor has insufficient income to pay all or most of his/her debts. Otherwise, if the debtor has an income or property and can afford to pay all or a substantial portion of his/her debts, chapter 11, 12, or 13 may be appropriate depending on whether the debtor is an individual, partnership, business, or family farmer. These are only a few of the factors to consider, however. There is no way that a simple leaflet such as this can spell out all the different things to be measured.
Will bankruptcy stop garnishment or lawsuits?
The filing of a Chapter 7 or Chapter 13 bankruptcy will stop a creditor from continuing almost all common legal actions against the defaulter the most common types of civil legal actions or lawsuits are those brought on behalf of credit card lenders, hospitals, clinics, and mortgage companies.
Will filing for bankruptcy stop harassing phone calls?
Yes. Filing for bankruptcy will prohibit any type of collection effort regarding a civil debt.
Will filing bankruptcy stop foreclosure?
In most instances, filing for bankruptcy will stop foreclosure on mortgages. Also, a Chapter 13 Repayment Plan can offer a defaulter a means of catching up on delinquent payments and allows a defaulter to keep ownership of a home
How long does a bankruptcy stay on my record?
Bankruptcies remain on credit reports anywhere from seven up to 10 years.
For more information
Orlando bankruptcy lawyer – Joseph E Seagle, PA prides itself on providing its clients with Low Fees and Flexible Payment plans. Our office will work to stop harassing creditor calls and will work to help you gain the financial freedom you desire. Call the attorney’s direct number 321-945-4404 for a free legal consultation today.