THE FOUR CHAPTERS OF THE BANKRUPTCY CODE AVAILABLE TO INDIVIDUAL CONSUMER DEBTORS
CHAPTER 7-This bankruptcy chapter is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a "means test" designed to determine whether the case should be permitted to proceed under Chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, the United States trustee (or bankrutpcy administrator), the trustee, or creditors have the right to file a motion requesting that the court dismiss your case under subsection 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.
Under Chapter 7, you may claim certain of your property as exempt under the bankruptcy code. Meaning that you can keep personal and real property valued up to certain amounts. A bankruptcy trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.
The purpose of filing a Chapter 7 bankruptcy case is to obtain a discharge of your exisiting debts. Meaning that you would no longer legally be responsible for these obligations.
You should be aware that some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay nondischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy petition; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Alsol, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.
CHAPTER 13-This bankruptcy chapter is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are eligible for a Chapter 13 case if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.
Under Chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. This period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.
After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.
CHAPTER 11-A Chapter 11 case is designed for the reorganization of a business but is also available to consumer debtors. These type of court filings are very complicated matters that would have to be discussed in detal with one of our attorneys.
CHAPTER 12-Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similiar to Chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.
CREDIT REPAIR-Sometimes a bankruptcy filing can be avoided. This depends on the amount of debt, income level, and if the creditors are willing to negotiate settlements on these debts. Also, some court cases can be won by the debtor despite the fact, that the debt is his/hers. One of our attorneys would be glad to discuss your options to resolve your debt problems.
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