Bankruptcy and What It Means for You

Bankruptcy and What It Means for You ALL ABOUT BANKRUPTCY LAWS Bankruptcies allow those who can no longer pay their creditors get a FRESH START. By liquidating assets and creating a repayment plan, debtors can begin to settle their debts. BANKRUPTCY PROTECTS troubled businesses. Businesses can reorganize their structure, or liquidate their assets to aid in repayment of their loans. FEDERAL COURTS have jurisdiction over bankruptcy cases, and decide the details of the person's or organization's discharge. Most cases are filed under the three main chapters of the BANKRUPTCY CODE: Chapter 7 Chapter 11 Chapler 13 Liquidation of Assets Business Bankruptcy Individual Repayment Plan (Debt adjustment for one with regular income) WHICH ONE IS RIGHT FOR YOU? You can only pay the minimum payment on your loans. Involves the reorganization of a 5 YEARS Businesses whose long-term revenue potential is greater than the amount it could be liquidated and sold for. debtor's financial affairs. You do not foresee yourself getting out of debt wihthin the next five years. CALENDAR The goal is to create a payment plan for the benefit of the creditors, while protecting the Used by individuals when their debt exceeds the limit of those debtor from foreclosure, You have no steady income or in Chapter 13 bankruptcy. garnishment, levy, or similar disposable income and you have not received a discharge in bankruptcy in the last 8 years. consequences. SEBTS Most unsecured debts, with the exception of student loans and most taxes, are completely discharged/eliminated. There is no payment plan, they are eliminated 100%. You do not lose your property unless you want to surrender it. Secured property like your home and car can be paid in the plan to protect it from being seized. You are given breathing room and normally left in charge of the business. 3-5 YEARS DISCHARGE The process moves quickly-you may receive your discharge in just a few months, typically around five to six from You have the opportunity to develop the reorganization plan free of creditor pressure, although the creditors must ultimately approve it. You only make payments for 3-5 years on your debts. Payments are based on what you can afford and not what you owe. If at the end of the 3-5 year plan you still owe creditors money, that debt will likely be discharged so no further payments are required. the date it was filed. LEGAL ACTION MONTHLY The automatic stay provisions prevent creditors from taking legal action outside the bankruptcy reorganization Borrower is no longer liable for most debts if plan is successfully completed and discharge is ordered by court. No monthly payments to worry about since there is no payback that could harm the debtor or of debt. jeopardize a successful reorganization. >$383,175.00 >$1,149,525.00 MEANS TEST Any individual debtor owing less that $383,175.00 in unsecured debt and less than $1,149,525.00 in secured debt. A debtor who has passed the "means test" which determines Businesses that want to restructure their debt and get out from under certain burdensome leases and contracts. eligibility for Chapter 7. People with incomes higher than state median income will have difficulty being eligible for this type of bankruptcy. Debtors must also meet with a An individual who has completed credit counseling with an approved agency within 180 days prior to filing for Chapter 11 bankruptcy. credit counselor at some point during the six months prior to applying for bankruptcy, and must attend money management classes at their own expense Mandatory credit counseling must also be obtained within 180 days before filing bankruptcy petition. before a final order will be issued by the bankruptcy court. $306 $1,213 $281 HOW LONG DOES IT STAY ON A CREDIT REPORT? 10 YEARS 10 YEARS 7 YEARS from the filing date from the filing date after the date of discharge not filing SEEK LEGAL ADVICE CONSULT WITH AN ATTORNEY before filing for bankruptcy to help you fully understand your options and avoid potential pitfalls. Although bankruptcy is a legal proceeding that allows a debtor a fresh financial start, it is an option that should be exercised only when other options have been exhausted. Disclaimer: 1. This is advertising material. 2. This is not intended as legal advice - consult an attorney for legal advice. http://www.uscourts.gov/FederalCourts/Bankruptcy.aspx http://www.businessnewsdaily.com/3997-chapter-11-bankruptcy.html http://www.justia.com/bankruptcy/docs/chapter-11-bankruptcy.html http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyResources/BankruptcyFilingFees.aspx http://www.experian.com/credit-advice/topic-bankruptcy.html http://sites.lawhelp.org/documents/74261bankruptcy.html FILING FEES WHO CAN FILE? ADVANTAGES COMMONLY USED WHEN %24