WHAT IS BANKRUPTCY?
Bankruptcy is designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Article 1, Section 8, Clause 4 of the United States Constitution vests Congress with the power to make uniform laws on the subject of bankruptcies throughout the United States.
WHAT ARE THE DIFFERENT TYPES OF BANKRUPTCY?
There are six types of Bankruptcy
• Chapter 7: This is the most common type of bankruptcy and otherwise referred to as liquidation or straight bankruptcy. It is designed for individuals and businesses. However, only individuals will receive a discharge. Unlike Chapter 13, relief is available irrespective of the amount of debt.
• Chapter 9: municipal bankruptcy
• Chapter 11: rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets
• Chapter 12: rehabilitation for family farmers and fishermen;
• Chapter 13: also known as Wage Earner Bankruptcy; individuals with regular income to develop a plan to repay all or part of their debts
• Chapter 15: This is a new chapter added to the Bankruptcy Code by the Bankruptcy Abuse and Prevention Consumer Protection Act of 2005.
It provides a mechanism for dealing with bankruptcy debtors and helps foreign debtors to clear debts.
How do I qualify for Chapter 7 Bankruptcy?
1. Must pass the means test, which is a formula designed to keep individuals with higher income from filing Chapter 7 bankruptcy. The Means Test is designed to force debtors who have the ability to pay some of their debts into Chapter 13. Exemptions from the means Test include the following: Disabled Veteran, Reservist or National Guard, Person whose debt is primarily non-consumer debt, and CMI of debtor and spouse that is less than the applicable state income.
2. Must not have received a Chapter 7 discharge within 8 years.
3. In addition, there are other nuances to the qualification requirements that the guidance of a bankruptcy practitioner is strongly recommended as the process can be very tedious and complicated.
What is the filing fee for Chapter 7 Bankruptcy?
The filing fee is $338
What is the Attorney Fee for Chapter 7 Bankruptcy?
The attorney fee is $799 for a single filer in the Lansing area without property to reaffirm.
What are the treatment options for secured debt in Chapter 7
What is the filing fee for Chapter 13 Bankruptcy?
The filing fee for Chapter 13 Bankruptcy is $313
How are the debts classified in Bankruptcy?
(1) Secured debts: Obligations protected by collateral or real estate, like car payments and mortgages
(2) Unsecured debts: Dischargeable debts like credit card debt, medical bills,
signature loans, etc
(3) Priority debts: Non-dischargeable debts owed to governmental agencies
like taxes, child support, criminal fines and restitution.
What are the qualifications for Chapter 13 Bankruptcy?
1. Must have regular income with desire to pay debts but currently unable to do so. Available to individuals with regular income from any source, not just wages
2. Unsecured debts limit of $465,275
3. Secured debts limit of $1,395,875
What are the benefits of Chapter 13 over Chapter 7?
(1) The curing of mortgage arrearage and prevention of foreclosure.
(2) Stripping of the second mortgage where the property value is less than what is owed on the first mortgage.
(3) The payment of priority/non-dischargeable tax obligations through the Plan without incurring post-petition interest.
(4) Capping the payment to secured creditors on their secured claims at the Plan confirmation value allowing the debtor to benefit from post-confirmation appreciation.
(5) Automatic stay protection for co-debtor.
What debts are not discharged?
– Federal, State and City Income Taxes incurred within three years of filing.
– Taxes that have been assessed within 240 days of the petition.
– Debts for obtaining money, property, or services by false pretense.
– Consumer debts owed to a single creditor and aggregating $500 for luxury goods or services incurred within 90 days of the petition.
– Debts arising out of fraud or defalcation committed while acting in fiduciary capacity, embezzlement or larceny.
– Domestic support obligations.
– Debts arising from willful and malicious injury by debtor to another entity or property of another entity.
– Fines and penalties.
– Educational loans owed to a government unit or nonprofit institution.
– Debts arising from death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft, if such operation was unlawful because the debtor was intoxicated from using alcohol, drugs or another substance.
– Loans or cash advances taken to pay nondischargeable tax obligation.
What is a Bankruptcy Discharge?
A Bankruptcy discharge terminates any personal liability on the part of the debtor with regard to a pre-petition debt and operates as an injunction or total prohibition on debt collection efforts against the debtor.
Can Bankruptcy stop garnishment?
Can I get the garnished funds back?
Yes, if the garnished amount is over $600 and within 90 days of the filing date.
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