If you are under bankruptcy protection or considering filing a bankruptcy petition, you may be wondering how long the whole process would take. Well, the answer to that largely depends on which chapter of bankruptcy you file for. In addition, it usually also depend on the amount of debt you hold. Let’s look at the two applicable types of bankruptcy for individuals – Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is known as liquidation bankruptcy because you have to liquidate certain assets to pay off your debts. Chapter 7 bankruptcy normally takes between 4 to 6 months before all your qualified debts can be discharged if there are no objections filed by any of your creditors. The types of debts that are dischargeable under Chapter 7 are usually unsecured debts such as credit card debts or medical bills. If you have little or no source of income and few assets, it is advisable for you to file for Chapter 7 bankruptcy.
Under Chapter 7, you provide a list of all assets and debts to the bankruptcy court. A bankruptcy trustee (who is appointed by the bankruptcy court to administer your bankruptcy) will review your list of assets and liabilities. Then you bankruptcy trustee calls for a meeting with creditors. If everything goes smoothly, the whole process is normally over within 6 months.
Chapter 13 bankruptcy is also called the workers’ bankruptcy and it is basically a consolidation of your debts by the bankruptcy court. The court assigns you a bankruptcy trustee who draws up a payment plan to clear your debts within 3 to 5 years. Once the bankruptcy court approves of the plan, you start repaying your debts. The advantage of a Chapter 13 is that you do not have to liquidate any of your assets.
To comply with the payment plan, you would normally have to be employed or have a steady source of income. Don’t worry about whether you can fulfill your obligation to pay because the repayment amount would be set by the bankruptcy court in accordance with your level of income. In fact, it is not uncommon for the amount of payment on some of your debts (such as your car loan installments) to be reduced by the court.
Your bankruptcy trustee will also call for a meeting with creditors and then monitor your repayments during the period of your bankruptcy. As long as you keep up with your payments, things will go smoothly and you should exit bankruptcy after your debts have been paid up according to your repayment schedule.
Chapter 13 bankruptcy has helped many people pay off outstanding debt, retain personal property and discharge qualifying debt at the end of the payment period.
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Filed under Chapter 7 (Tampa) by on May 14th, 2012. Comment. 
Credit and Financial Management Courses in Bankruptcy
As a prerequisite for filing for bankruptcy, you have to take up a course that gives you credit counseling. This applies to both Chapter 7 and Chapter 13 bankruptcy. Once you complete this credit counseling class, you would be allowed to file your bankruptcy petition. After filing for bankruptcy, there is another course that you are obligated to take. It is a course on financial management. This is a prerequisite for receiving your discharge through bankruptcy and must be taken within the first 45 days of filing for bankruptcy.
The purpose of the financial management course is threefold:
1. The enlighten you on the benefits of creating short-term and long-term financial goals
2. To guide you on how to draw up a budget
3. To give you practical instructions on how to balance a checkbook and reconcile bank statements
Both these courses are designed to improve your financial knowledge and skills and help you avoid having to file for another bankruptcy in future. There is usually a list of centers approved by the US government you can register with to take up these two courses. Consult your bankruptcy attorney on where and how you can take these two mandatory courses. Failing to take up the course on financial management would likely result in your bankruptcy case being closed.
After you file for bankruptcy, there are often many things to attend to and you may inadvertently forget to attend the financial management course by the 45 day deadline. If that happens, you should check with your bankruptcy attorney or trustee to find out if your case has been closed. If it has not, it is not too late to attend the course. You will be awarded a certificate upon successful completion of the course, which you need to file with the bankruptcy court.
However, if your bankruptcy case has been closed, you should appeal to the judge to reopen the case for the purpose of filing the Financial Management course certificate. Most judges would allow you to do so. But you do need to pay a fee to reopen your case, which is about $200. But this fee would be worth it if you can have your qualified debts discharged through bankruptcy.
If you wish to file for bankruptcy, call us at (813) 200 4133 for a free consultation. Bankruptcy is your right under the law and is a provision for you to have your qualified financial debts discharged, thereby enabling you to have a fresh start financially.
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Filed under Chapter 7 (Tampa) by on May 10th, 2012. Comment.
Suppose you have filed for Chapter 13 bankruptcy but some change in circumstances (usually having to do with your finances) take place that make it difficult for you to continue with Chapter 13 bankruptcy. What do you do then?
Chapter 13 bankruptcy means you need to follow a payment plan to repay all your debts over a 3 to 5 year period of time. But if you lose your job, take a pay cut or have to reduce your work hours, you might not be able to keep to your payment plan. If such developments take place you may have no choice but convert your Chapter 13 bankruptcy to a Chapter 7 one.
Consult your bankruptcy trustee or bankruptcy attorney and discuss what to do. Converting from Chapter 13 to Chapter 7 is possible but it depends on whether you qualify. To qualify for Chapter 7 bankruptcy, you have to pass a means test which gives an idea of what disposable income you have left after taking care of pertinent expenses. To find out how much disposable income you have after essential expenses, an evaluation of your annual income is done to see if it exceeds the mean income level per household in your state. If you exceed it, then you may not qualify for Chapter 7 bankruptcy.
So if the circumstance precipitating your intended change from Chapter 13 to Chapter 7 is a loss of your job leaving you without income, then you should qualify for Chapter 7. But if you still hold a job but your income has reduced, then you need to see if you pass the means test based on your reduced income.
If you pass the means test and qualify to convert from Chapter 13 to Chapter 7 bankruptcy, you have to file a motion to convert your Chapter 13 case to Chapter 7. You do so by filing a notice of conversion with the bankruptcy court. Most motions to convert from Chapter 13 to Chapter 7 bankruptcy are not challenged by the bankruptcy court if all relevant information is presented and all necessary paperwork is done.
It is rather common to have changes in your financial situation. If this happens to you, you should consider converting your bankruptcy case as it may allow you to get certain debts discharged (meaning you do not have to pay them off).
If you wish to wish to file for bankruptcy protection or convert your bankruptcy case after filing your petition, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on May 8th, 2012. Comment.
Once you file for bankruptcy protection, an automatic stay on all collection efforts by creditors comes into immediate effect. This gives you the opportunity to proceed with the bankruptcy process without disturbance or distraction from creditors. But there are a few exceptions to the automatic stay rule such as collection efforts arising from a criminal case, collection for child support, student loans and certain taxes. Automatic stay is also not applicable for debts you incur after filing for bankruptcy. Other than these, by and large all creditors must abide by the automatic stay rule and cease collection efforts during your bankruptcy.
What should you do if one or more creditors violate this rule? Now if the creditor(s) are not aware of your bankruptcy filing, then you should instruct your bankruptcy attorney or trustee to inform him or her of it. This should stop all forms of collection efforts by these creditors. If collection efforts still persist, you ought to inform the bankruptcy court.
The bankruptcy court will reprove the creditor(s) violating automatic stay with a court order and impose a fine on the creditor(s).
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Filed under Chapter 7 (Tampa) by on May 7th, 2012. Comment.
The essential difference between Chapter 7 and Chapter 13 bankruptcy is that in Chapter 13 bankruptcy you will not lose any of your assets as it is basically a payment plan drawn up by the bankruptcy court to pay off your debts over a period of time up to 5 years. The payment plan would be based on your income and ability to pay. If you keep to the payment plan, you get to keep all your assets.
So how do you know when you need to file Chapter 13 bankruptcy? Here are some indications.
1. When you do not qualify for Chapter 7 bankruptcy because your income exceeds the means test
Those who wish to file Chapter 7 bankruptcy must pass the means test by having their income lower than the average household income in their state (this differs from state to state). So if you do not qualify for Chapter 7, you have to file for Chapter 13 instead.
2. You have enough disposable income to pay towards your debts after essential living expenses
To make periodic payments according to a payment plan obviously means you do have some disposable income each month. This makes you eligible for Chapter 13 bankruptcy.
3. You are struggling to keep up with your periodic payments but want to keep your assets
For most people, their most essential assets are their home and vehicle, both of which are under some form of periodic payment agreement like a mortgage or lease. If you are not able to keep paying your periodic payments for these assets but still want to keep them, you should consider filing for Chapter 13 bankruptcy.
4. You want to have bankruptcy protection from your creditors while repaying your debts
Once you successfully file Chapter 13 bankruptcy, you come under automatic stay i.e. your creditors are barred from making any more attempts to collect on the debts you owe. At the same time, you wish to be able to repay your debts according to your affordability, not the demands of your creditors. If this situation describes you, Chapter 13 bankruptcy is ideal for you.
5. Your assets qualify for Chapter 13 bankruptcy rather than Chapter 7
You should always file for the Chapter of bankruptcy that is most relevant to your assets so that you stand the best chance of being approved. If your assets are more suitably filed as Chapter 13 rather than Chapter 7 bankruptcy, you should opt for Chapter 13. To determine which Chapter of bankruptcy your assets are better filed under, contact us at (813) 200 4133 for a free consultation.
6. You need legal help repaying your debts now but want to have the option of filing Chapter 7 in future
To determine how to file for Chapter 7 after filing for Chapter 13 bankruptcy, call us at (813) 200 4133 for a non-obligatory discussion.
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Filed under Chapter 7 (Tampa) by on Apr 27th, 2012. Comment.
