Bankruptcy Law: New Laws for Chapter 7,11, 13

Filing business or personal bankruptcy under chapter 7 is basically the same process. The idea is to liquidate all of your assets to help satisfy the debts to creditors.

However, any remaining debt that is not exempt from bankruptcy will still be your responsibility.But, you should be able to crawl out from under a mountain of debt and get a fresh start financially.

Before you Begin

Although you may think chapter 7 bankruptcy is the only viable option you have left for debt relief, you need to check with a bankruptcy lawyer first.

If you file chapter 7, all of your assets that are worth anything, and are not exempt, will be liquidated (sold) to use the money to pay back your creditors as much as possible.

For example, if you want to save your automobile or home, you may want to see if it would be better to file chapter 11 (for businesses) or chapter 13 (for personal and business).

In either case, the court will consider the current value of your property against what you owe creditors.  The amount you owe will probably be downsized to the current value and a repayment plan will be established for 3-5 years, so that you can afford to keep you things and still pay creditors.

After all, if the property is taken and resold, the creditor would only get the amount of value, if even that.

Bankruptcy Eligibility

If your lawyer advises that chapter 7 bankruptcy is your best option, you will be required to prove that you are eligible for debt relief.

In other words, the world is full of people who simply do not want to be responsible for their bills anymore.  Thus, they abuse the system.  They would be better served to go through consumer credit counseling, or some other resource to manage their debt.

Now, because of the actions of others, you will have to present the federal bankruptcy court with all of the information required to make sure you really are in financial trouble, and you have exhausted all other options to pay back your creditors. In fact, it is now a requirement that anyone who files for bankruptcy go through credit counseling. It is not a matter of choice.  If you do not attend an individual or group meeting your petition will automatically be denied.

What the Bankruptcy Court Wants

Your bankruptcy lawyer will advise you regarding what the court requires. But, the more you can prepare, the easier the process will be in the long run.The court will basically be looking for 4 items.

• 1.Schedule of Assets and Liabilities
• 2.Current Income and Expenditures
• 3.Statement of Financial Affairs
• 4.Active Contracts and Leases
According to www.uscourts.gov/, the forms you fill out must include:

• 1. A list of all creditors and the amount and nature of their claims;
• 2. The source, amount, and frequency of the debtor's income;
• 3. A list of all of the debtor's property; and
• 4. A detailed list of the debtor's monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

You will have to disclose anything and everything about your finances, even if there are expenses that you would rather not discuss.Withholding any information from the court could result with the dismissal of your case.

Also, you could be charged criminally, depending on the circumstances.If it is an honest accident of neglect, you may not be charged criminally. But, if the court determines that you tried to withhold vital information, you can be charged with fraud.

For this reason, it is extremely important that you hire a bankruptcy lawyer to handle you case.You want to make sure that everything is done correctly.

Your case will also be thrown out of the court, if you have tried to file bankruptcy in the last 180 days and been denied.

You cannot waste the courts time and resources. Chapter 7 bankruptcy is only for those that have a legitimate need for debt relief and are not simply trying to discharge their bills.

In summary, chapter 7 bankruptcy is a pretty drastic step to take financially.You should not enter into the decision lightly.

You will want to very carefully weigh the benefits and the drawbacks of such an action, before you begin.

Learn about hiring a lawyer, the required meeting with creditors, the court fees and exceptions, the role of the trustee, and discharging your debts.

But, should you think that this information is all you need to file bankruptcy, you would be mistaken.

The information is to help you become an informed citizen and help you decide if bankruptcy is right for you.  But, it is your bankruptcy lawyer that will help you iron out the finer details and make sure you are complying to the letter of the law.

Have you considered the alternatives to filing bankruptcy. Of course, it is preferable to figure out a way to pay your bills, so that you can keep your stuff, have a car to get a job, and still have a roof over your head.

But if chapter 7 bankruptcy is in your future, you also need to know what the court requires, before they will even consider your petition for debt relief. It is very obvious that you will need the services of a bankruptcy lawyer. But, how to you find the right lawyer, approach the meeting with the creditors, pay the court fees, deal with the trustee, and what happens when your debts are discharged.

Your Bankruptcy Lawyer

When you file for bankruptcy, there is so much to think about and you need to hire a lawyer. But, you also need to be careful. If the initial consultation is free and the bankruptcy lawyer will only make money if you actaully file bankructy.You want to get fair and honest financial advice, whether you file for chapter 7 or not.

Meeting of Creditors

If you are filing bankruptcy, there will be a required meeting of your creditors. Along with your trustee, you will have to answer to these people. They will be allowed to ask you questions in regards to your inability to pay them back. The trustee can also ask you questions, to make sure that nothing has been forgotten or left out.

Bankruptcy Expenses

Even when you file for chapter 7 bankruptcy, everything costs money. You will have to pay for your lawyer and you will also have court costs. Normally, you will have to pay the clerk of court a mandatory case filing fee, a miscellaneous administrative fee, and trustee surcharge.

The fees can be divided into installments, to help you with the cost. However, if your income is less than 150% of the poverty level, the fee can be waived.

Bankruptcy Trustee

Once you have filed for chapter 7 bankruptcy, you will be assigned a trustee.The trustee is there to help you liquidate your assets. Accepting all the help you can get to expedite the process. The trustee is also there to ensure that no personal property that is necessary for living is included in the sale of items. The bankruptcy trustee is simply doing the job assigned by the court.

Bankruptcy Process

The bankruptcy process may seem long and arduous. But, there will be a time when you can truly look forward to that fresh start. The eligible debts will be discharged, which means you will no longer be responsible for the payments. But, not all of your debts can be forgiven. If you owe child support, have had a legal judgment against you, student loans, or other things that do not qualify for bankruptcy.

Your bankruptcy can also be revoked, if the court finds you have misled them in any way So, be aware that you cannot get out of all your financial responsibilities. Also understand that the courts are trying to help you, not make matters worse. So get yourself a good bankruptcy lawyer, do what it takes to get through the process, and then you can start looking forward to a brighter future.