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The Bankruptcy Process

Plant City Bankruptcy Lawyer: How Bankruptcy Works

The bankruptcy process is governed by the federal bankruptcy code and both federal and local bankruptcy court rules. Chapter 7, also termed "liquidation bankruptcy" is the most commonly filed form of bankruptcy. It is also often called "personal bankruptcy." In most cases, the person filing bankruptcy loses none of his or her assets, which is called a "no-asset case." For those who own property or have an income above the median for the state, and do not qualify for Chapter 7, Chapter 13 can be a good option. In either case, the debtor is protected from any collection actions from creditors – a great advantage for those who have been hounded by collection agencies.

Do I qualify for bankruptcy?

In Chapter 7, the first step is to determine if you qualify by taking the means test. The means test measures your current financial situation, income and eligible debt, against the state median. If you come in below the state median, you will qualify to file Chapter 7. If not, you may still qualify by claiming certain exemptions which can be used to reduce the amount you must report as income. The next step is to file a petition with the bankruptcy court. The filing must include a full disclosure of the assets and liabilities of the person, the current income and expenses, a financial statement and any leases or contracts that are still in place.

A tax return for the most recent tax year must also be filed. Individuals seeking relief under Chapter 7 must also submit a certificate of completion of credit counseling, pay stubs or other evidence of any income for the past 60 days, a statement of net income and any expected increase of income, and other information. There is a filing fee that must be paid when submitting this data to the court. When the income of the person filing is determined to be less than 150% of the poverty level, these fees may be waived.

The data that is included in a bankruptcy petition will include:

  • A full list of all creditors and how much is owed, and the type of debt;
  • The income of the petitioner and the source of that income;
  • A list of all of the property owned by the creditor;
  • A fully detailed list of living expenses including food costs, rent or mortgage payment, utilities, taxes, cost of transportation, medical expenses and other expenses;
  • A list of exempt property (the property you have a right to keep in bankruptcy), which can be determined with the help of your attorney.

Once the petition is filed, an "automatic stay" is issued. No creditor can contact you by any means while this is in place.

About 3 – 5 weeks after the petition is filed, there is a "meeting of creditors." At this meeting, the petitioner is put under oath and answers questions from creditors. In many cases, no creditors show up for this meeting. Unless there is a specific creditor that challenges the discharge of debt, the discharge will take place automatically, and unsecured debt, such as credit card debt, medical bills, personal loans, utility bills and other similar debts, will no longer be enforced against the debtor. Some debts may not be eligible for discharge, and these include student loans, spousal support or child support payments, some taxes (recent), and some others.

The entire process is complete in about 4 months, in most cases, at which point a discharge notice is sent to all creditors and the debt is gone. At this point, you now have the ability to move forward with a fresh start financially.

In cases where the petitioner does not meet the eligibility requirements for Chapter 7, the petition will automatically be converted to a Chapter 13 case. For Chapter 13, the process involves arrangements being made for payment for all outstanding debt in one monthly payment that will be distributed to the various creditors. The amount of this payment is calculated to be within the debtor's ability to pay every month, and therefore will be less than the amount that he or she is currently paying. At the end of the repayment period, the remaining debt is discharged. This process takes 3 – 5 years rather than several months, and is often the best form of bankruptcy for those who earn too much to qualify for Chapter 7, own a home or other property that they wish to retain, or do not want to file Chapter 7 for some other reason. For more information about Chapter 7 or Chapter 13 bankruptcy and to get the process started, contact my firm now.

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Law Office of Keith Will Wynne, Esq. - Plant City Bankruptcy Lawyer
Plant City Office - 1001 E. Baker Street, Suite 101, Plant City, FL 33563. Phone: (813) 567-5894 | Local Phone: (813) 752-3100.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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