Basic Information About Bankruptcy

Definition of Bankruptcy

Bankruptcy is a legal procedure that allows you to get a fresh financial start if you find yourself unable to pay your bills and can meet certain requirements. The right to declare Bankruptcy is provided in the Federal Bankruptcy law, and all Bankruptcy cases are processed in Federal Court. When one enters a Bankruptcy petition, immediately for all creditors try to collect debts while the Court has access to your financial situation and determines if the Bankruptcy relief can be granted in your case.

Chapter 7 Bankruptcy

The Chapter 7 Bankruptcy is part of the United States Bankruptcy Code that deals with a settlement, which means the sale of all assets that are not exempt from a court-appointed trustee. Creditors will be paid from the proceeds of the sale. In return, a debtor receives a discharge, which releases a debtor from all downloadable debts and orders creditors to stop forever their attempts to collect the debts unloaded.

When a debt is discharged, a debtor is forever released from the obligation to pay that debt. Not all debts are downloadable, it includes certain taxes, maintenance or child support, student loans, debts that are not listed in the Chapter 7 petition, and debts that have been incurred by defrauding or misleading a creditor.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is the part of the United States Bankruptcy Code that is designed primarily for residential homeowners and allows a married person or couple to pay everything, or a portion, of their debts under the supervision and US Bankruptcy Court Protection

Chapter 13 Bankruptcy is designed for workers, with steady incomes, who are bombarded with accounts, judgments and other financial concerns. A Chapter 13 plan is primarily used to compensate for mortgage arrears, and a percentage, or all of the money due to your other creditors, during a 3-5 year period. Chapter 13 can also be used as an alternative to credit counseling where an individual can offset their credit card debt over a period of 3-5 years without the accumulation of charges in view of additional interests.

While a Chapter 13 Bankruptcy case is in effect, creditors can not begin or continue their collection efforts and must accept what the plan pays them. Any individual or married couple, even if independent, can receive relief from Chapter 13 if they owe less than $ 250,000.00 in unsecured debt and less than $ 750,000.00 in secured debt.

Upon successful completion of a Chapter 13 reimbursement plan, the debtor receives a discharge and a certificate of termination, which extinguishes all obligations to make other payments on unsecured debts, even though these creditors are not paid in full. In fact, many people in Chapter 13 Bankruptcy only pay their unsecured creditors no more than 10, 20 or 30 percent of the total amount owed.

A Simple Guide to Uncontrolled Bankruptcy

There comes a certain time in just about everyone"s life that things just do not turn out the way you thought they ought to and you find yourself in deep financial trouble. For many people, this is a hard situation to face, and if someone has a strong work ethic and values that tell them that you must always work hard in life and pay all your bills. Some people are so stuck in this thinking that when the hard times come, they see no way out and it can seem like the end of the world to them. It"s nothing to feel ashamed of or be embarrassed. You just might have to face the fact that you have hit a point when you cannot avoid bankruptcy. If possible, spend some time at a bankruptcy court to observe the action of bankruptcy lawyers in Jacksonville FL. Doing so can help you to get an idea of the trial.

It will be “business as usual" in the collection industry. People that choose to file bankruptcy will be affected for the worse, as I"ll outline below, but those who want to negotiate their way out of debt privately will notice a tiny difference. Creditors will still negotiate. Deals will still go through. And nothing much will change in the world of collections. In fact, a viable alternative to bankruptcy is valuable more than ever. But before you file for bankruptcy, just know that it may not be necessary. You might be judgment-proof, meaning that if you present yourself to court by one of your creditors, your life situation might tell the judge that you really can"t pay back your bills. For example, you have very, very little assets, low income, and a lawsuit just might do you financial harm. You may not even be worth a trial because you would have absolutely nothing to offer the creditors. So filing for bankruptcy would just be a waste of time.

Look at your talents and see what you could do to make some money on the side. For instance, I"m a certified healthcare instructor so that I could provide my classes in CPR, first aid, etc. I"m a writer and using this love for writing to make money on the side with Associated Content. Maybe you know how to bake some good stuff. Make a bake sale. Know auto mechanics? Offer to check out and fix some cars on the side. Whatever your talents are in, do it to make some money on the side.

A few right questions to ask bankruptcy lawyers in Jacksonville FL are: how many bankruptcy cases have they have tried? How long is their experience in the field of bankruptcy law? Ask them: how complicated is my case, and how do you plan to go about handling it? Beware of a lawyer who will just tell what you want to hear. If the lawyer doesn"t talk about any of the difficulties of the process, they may just be looking to you to sign a contract with them. Make sure your lawyer holds a good degree of specialization in the field. Bankruptcy is an intricate area, and only a person who has the expert knowledge in this field can help you file your case.

Lastly, you need to be in a pre-trial conference with creditors to settle any debt payment plans. Do this before the court hears your side of the story. Your lawyer can accompany you at the pre-trial conference.

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Means Test For Chapter 7 Bankruptcy

Bankruptcy is a drastic situation where homeowners or car owners come directly under the scanners of their respective lenders. Chapter 7 Bankruptcy is among the most prominent chapters sitting under the BAPCPA, which is the new Bankruptcy Act, hence Chapter 7 was modified in the form that is available as Chapter 7 Means Test. The purpose of modification seems to be quite necessary as Chapter 7 bankruptcy was being abused by many in its previous form. The good thing to know here is that everyone who previously qualified for a Chapter 7 bankruptcy will easily be eligible for Chapter 7 means screening.

Qualification for the Means Test

If your “Current Monthly Income" is below the income level of your state"s household size, even then you will only qualify for Chapter 7 proof.

Here the term “Current Monthly Income" would mean the monthly average accumulated during the last six months. In case your average monthly income in the last six months is above average, then you have to deduct the allowable expenses using a complex calculation formula.

If at the end of the application of the formula you find money in what remains for overpayment to creditors even after deducting the allowable expenses, you fail the means test eligibility.
You can look up Chapter 7 bankruptcy information from the Federal Government website. Browsing the website will provide you with detailed information on the rules, terms, and conditions.

Be prepared to avail benefits under the test which is the result of BAPCPA-the new bankruptcy law. Chapter 7 means is the new and modified version of the bankruptcy law envisaged in the BAPCPA. The purpose is to prevent people from abusing the terms and conditions written under the bankruptcy law. With chapter 7 bankruptcy modified, it has become quite easy to file for bankruptcy and get the most out of the losses your business has incurred. Make sure you understand all the written protocols in order to achieve the benefits provided in this new bankruptcy law.

Make sure you study the Chapter 7 bankruptcy requirements in detail. For this purpose, you need to hire the services of the bankruptcy lawyer and discuss your eligibility requirements. You can also search for means calculator online for details.

Eligibility For A Chapter 7 Bankruptcy

If you are looking for an easy way to determine your eligibility under Chapter 7 means testing, use an online means test calculator. Once you enter your zip code, the calculator uses the applicable income and expense guidelines for your state, county, and region to determine your eligibility.

You will need to provide some income and expense information, but the calculator will save you the hassle of looking for spending and income figures for your area and doing the math. And, if you decide to file for bankruptcy Chapter 7, you can use these figures in official paperwork (the calculator closely follows the format of the means form, Official Form 22A, which must be done when you file for bankruptcy).

The “proof of means" of bankruptcy determines if your income is low enough for bankruptcy Chapter 7. The formula is designed to keep the highest income claimants filing for bankruptcy Chapter 7. High-income claimants who do not exceed Proof of means they can use Chapter 13 bankruptcy to pay off a portion of their debts, but they cannot use Chapter 7 bankruptcy to completely clear their debts.

However, having to do the Chapter 7 means test does not mean that you must be poor to be able to use Chapter 7 bankruptcy. You can get significant monthly income and still qualify for Chapter 7 bankruptcy if you have a lot of expenses, such as a payment for a mortgage loan.

Chapter 7 Bankruptcy

In short, Chapter 7 bankruptcy is quite simple. You may no longer need to see a judge or enter a courtroom. Each case will be provided with a lawyer and a bankruptcy agent that you need to attend an “interview." The purpose of the “interview" is to verify that you have a faithful representation of your assets, income, and debt. When the “interview" is done, the guardian advises the court and recommend the discharge of all debts that are eligible and which of your property will remain. Final court order or the discharge is usually issued within 60-90 days.

The Chapter 7 bankruptcy is part of the bankruptcy code in the United States in connection with the sale of assets, meaning that the proceeds from the sale of all non-exempt property by a court-appointed administrator will be used to repay the creditors. In return, the debtor will be released from all debts and creditors will be ordered to stop their attempts to recover debts in the discharge.

Once the debt has been released, the debtor will always be exempted from the obligation to pay. Some debt cannot be discharged, for example, taxes, alimony, student loans, debt that are not listed in Chapter 7 petition and debt contracted as a result of deceiving or cheating creditors.

Bankruptcy Eligibility of Chapter 7

In its simplest form, there are two different standards for determining eligibility for Chapter 7 bankruptcy filing – property and income.

Regarding property, in some states, such as in the State of New York, including Queens, Nassau, and Suffolk, a person is allowed to protect their basic assets from creditors. These are called exempt property or exceptions. As long as the property does not exceed the legal limit value, you will meet this criterion.

Please take note that on 22 January 2011, the legal exception in the State of New York has increased and will constantly increase every three years since 2011. In particular: (a) the owner can now protect up to $ 165,000.00 of their share of equity in their primary residence. And (b) the lessee may protect approximately $ 13,000.00 in liquid assets, including the right to request payment.

With respect to income, under bankruptcy law, most individuals or couples seeking protection under Chapter 7 must meet certain eligibility criteria as part of the “test".

According to the test method, you must first determine if the average monthly income of all your sources of income for a period of six months prior to submission is under the median income depending on the size of your household. If your average monthly income for a period of six months show that it is less than the median income for your state, the first hurdle has been passed. As long as you meet the eligibility requirements you can apply for protection under Chapter 7 bankruptcy.