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Information On Filing for Bankruptcy
- What is bankruptcy?
- Do I need an attorney to file for bankruptcy?
- What is a joint petition?
- What is a bankruptcy trustee?
- What are the different "chapters" in a bankruptcy?
- What does the Clerk's Office do?
- Is there protection of property from repossession?
Bankruptcy is a way for people or businesses who owe more money than they can pay right now (a "debtor") to either work out a plan to repay the money over time under Chapter 11, 12 or 13, or for most of the bills to be wiped out ("discharged"), as in a chapter 7 case. While the debtor is either working out the plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. When the bankruptcy petition is filed, you are immediately protected from your creditors.
2)Do I need an attorney to file for bankruptcy?
While it is possible to file a bankruptcy case "pro se," that is, without the assistance of an attorney, it is extremely difficult to do so successfully. Hiring an attorney is recommended. The court is not able to give legal advice or help you fill out the forms.
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3) 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 on the filing date 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 that is a registered entity in a state or foreign country, 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 entity.
4) What is a bankruptcy trustee?
In all chapter 7, 12, 13 and in some chapter 11 cases, a case trustee is assigned by the court to administer the bankruptcy proceedings.
Who is the United States Trustee? What is the function of the U.S. Trustee?
The Office of the U.S. Trustee is an Executive Branch agency that is part of the Department of Justice.
The U.S. Trustee is responsible for appointing trustees to administer bankruptcy cases and setting the First Meeting of Creditors (§341 Meetings) dates and times. The staff also monitors the bankruptcy cases to see if bankruptcy fraud has occurred. They are prohibited from providing legal advice.
5) What are the different "chapters" in a bankruptcy?
Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as "straight bankruptcy" or "liquidation" cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy.
Chapter 12 offers bankruptcy relief to those who qualify as family farmers. There are debt limitations for chapter 12, and a certain portion of the debtor's income must come from the operation of a farming business. Family farmers must propose a plan to repay their creditors over a period of time from future income and it must be approved by the court. Plan payments are made through a chapter 12 trustee who also monitors the debtor's farming operations while the case is pending.
Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan which must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
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6) What does the Clerk's Office do?
The Clerk's Office provides a variety of services to the bankruptcy judges, attorneys, and the public. The Clerk's Office staff provides clerical and administrative support to the court by filing and maintaining case-related papers, sending notices, and setting hearings. The services provided by the Clerk's Office to attorneys and the public include responding to requests for information and making copies of papers in bankruptcy court files.
7) Is there protection of property from repossession?
Repossession is the power of the creditor to take back goods because of the buyer's failure to meet the loan payments.
There are two types of loans: secured and unsecured. A secured loan is one that requires you to pledge something as collateral. For example, if you purchase a car, the creditor will usually require you to put up the car as collateral. On the other hand, an unsecured loan, does not require collateral. Using a credit card is usually an unsecured loan.
If you default on an unsecured loan, the creditor's only recourse, after the letters and the collection agency efforts fail, is to sue. But if you default on a secured loan, the creditor can repossess the collateral and sell it. If the money from the sale isn't enough to pay off the loan, the creditor can sue you for the balance of the loan.
If you fall behind in your loan, you should contact your creditors as quickly as possible and attempt to work out a voluntary repayment plan. You can do this yourself or with the assistance of the non-profit Consumer Credit Counseling Service. Their toll-free number is: 1-800- 388-2227.
Bankruptcy may be able to cancel the debt, or it may give the opportunity to stop the repossession. However, bankruptcy should be used in only the most serious circumstances since it can affect your credit for up to ten years. If your property has already been repossessed, some states give you the opportunity to have your property returned by paying all outstanding loan charges, fees, and costs.
Bankruptcy Law Is A Federal Law. This Sheet Gives You Some General Information About What Happens In A Bankruptcy Case. The Information Here Is Not Complete. You May Need Legal Advice.