Alimony Child Support Debts that arise after bankruptcy is filed Some debts incurred in the six months prior to filing bankruptcy Loans obtained fraudulently Debts from personal injury while driving intoxicated Debts from willful and malicious injuries to person or property Some student loans Some taxes Secured loans, as lenders can foreclose on their capital
Common protected assets are cars, wedding rings, and your home. Some states may offer “wild card” exemptions that allow you to keep any other valuable assets up to a certain amount. Chapter 13 bankruptcy allows you to keep all of your assets, but you can reduce your liability to creditors by selling of assets of significant value. [2] X Research source
Individuals and businesses may file for Chapter 7. Property may be liquidated to pay off creditors. Secured debt may be eliminated, or you have the option of allowing the property to be repossessed or paying the creditor a lump sum equal to the current value of the property. Your income must be below a certain level to qualify for Chapter 7. [5] X Research source Chapter 13 is also known as “wage earner” bankruptcy. Under Chapter 13, if you have a reliable source of income, you can propose a repayment plan to your creditors that pays them back over the next three to five years. Your debts must be below $1,149,525 in secured debt and $383,175 in unsecured debt. [6] X Research source Note that the amount received by the creditors is established by your income after bankruptcy, not the amount of debt owed. Municipalities, such as cities, towns, villages, taxing districts, municipal utilities, and school districts can reorganize under Chapter 9. [7] X Trustworthy Source United States Courts Official website for the U. S. court system Go to source Businesses can reorganize under Chapter 11 or liquidate under Chapter 7. [8] X Trustworthy Source United States Courts Official website for the U. S. court system Go to source Chapter 12 is similar to Chapter 13. It is reserved for businesses for which 80% or more of debt is from the operation of a family farm or fishery. [9] X Research source
The impact bankruptcy has on your credit is largely determined by how good your credit is to begin with. If your credit score is high, it will probably take a huge hit and drop significantly. If your credit is already pretty bad, bankruptcy might not lower your score by very much. [11] X Research source The more accounts associated with the filing, the bigger the impact on your credit score. [12] X Research source If you file for Chapter 7 or 11, it will remain on your credit report for up to 10 years. If you file for Chapter 13, it may stay on your report for up to seven years. A Chapter 11 bankruptcy will stay on the business’s credit report, not the individual owner’s, unless they file a personal bankruptcy.
Filing without an attorney is called filing pro se. If you do decide to file pro se, the court may allow non-attorney preparers to help you. They can only help you with paperwork. They cannot answer legal questions or provide legal advice. Since they don’t represent you, they cannot sign anything on your behalf or receive payment for court fees. [16] X Trustworthy Source United States Courts Official website for the U. S. court system Go to source The United States has 90 bankruptcy districts, each with one bankruptcy court. Every state has at least one or more districts. [17] X Trustworthy Source United States Courts Official website for the U. S. court system Go to source
You may not have to fill out all of the forms. Your answers on the first form determine whether or not you have to fill out the others. [18] X Research source Download form 22A-1 from the U. S. Court’s website. The form takes you through the steps of calculating your income and comparing it to the median income in your state for the same household size. If your income is below the state median, then you qualify for Chapter 7. If not, you proceed to form 22A-2. Download form 22A-2 from the U. S. Court’s website. The form takes you through further analysis of your income to determine if you qualify for Chapter 7. [19] X Research source Fill out form 22A-1Supp to determine if you are exempt from the means test because most of your debts are from business expenses or you have recent military service. [20] X Research source
All debts need to be listed to be discharged; failure to list a debt may mean it continues after the bankruptcy.
A bankruptcy judge presides over the bankruptcy court. The bankruptcy judge rules on matters such as eligibility and discharges. A debtor rarely has to appear in court before the bankruptcy judge. Much of the process is administrative and is carried out by the trustee away from the courthouse.
Consult the Department of Justice to find a list of approved credit counseling agencies[24] X Trustworthy Source United States Department of Justice Official website of the U. S. Department of Justice Go to source and debtor education courses. [25] X Trustworthy Source United States Department of Justice Official website of the U. S. Department of Justice Go to source
Unless there are any objections to the discharge, it is usually granted automatically. Creditors, debtors and their attorneys all receive copies of the order of discharge.
In a Chapter 7 case, the discharge can happen within 60 days of the first 341 meeting, which is usually approximately four months from the date the debtor files for bankruptcy. It may take longer if a creditor files a complaint objecting to the discharge or a motion to dismiss the case. In Chapter 13 cases, the court grants a discharge after the debtor completes all agreed-upon payments. Since these payment plans last three to five years, it may take several years for the discharge to be granted.
The categories of debt that cannot be discharged include some taxes, spousal or child support, debts for personal injury, student loans, and debts owed for driving under the influence. Under Chapter 13, some debts can be discharged that would not be dischargeable under other chapters. These include some taxes, some personal injury debts, and debts from property settlements during a divorce. Petitioners can also file a hardship discharge if they are unable to complete the planned payments due to circumstances beyond their control.
A discharge can be revoked if it is determined that it was obtained fraudulently. This typically occurs within one year of the discharge.
Set up automatic payments to help you pay your bills on time.
