Are all bankruptcies the same?
No. A Chapter 7 bankruptcy – that’s chapter 7 of the federal bankruptcy code – is a personal, liquidation bankruptcy. The bankruptcy trustee will take all of your assets except those that are exempt under Idaho law. In return, almost all your debts can be immediately discharged and you get a fresh start.
Chapters 11 and 12 of the bankruptcy code provide for general business and farm bankruptcies. They are financial reorganization type proceedings.
Can anyone qualify for a Chapter 7 or Chapter 13 bankruptcy?
No. The law requires that you qualify under a “means test.” In a nutshell, the bankruptcy trustee examines your income and necessary expenses to determine if you are able to repay your unsecured creditors. The levels are dependent on where you live and how many people live in your home. The first step for you bankruptcy lawyer is to determine whether you qualify under the current “means test” criteria.
What’s the process of getting a bankruptcy?
Generally speaking, you file an application with the bankruptcy court in which you very carefully list all of your assets and liabilities, including an explication of the “means test” to demonstrate that you qualify for a bankruptcy. Your application is under oath so accuracy is essential. Upon filing your application, the law provides “an automatic stay” that stops your creditors from collecting or attempting to collect on your debts. Approximately three weeks after filing your application, you will be required to attend a “meeting of creditors,” in which the trustee will ask you questions about your application. Any creditors who attend will be allowed to question you as well. If all goes well, you will receive your discharge in Chapter 7 (or have an approved payment plan in Chapter 13) approximately six weeks later.
I have filed for bankruptcy before, can I file again?
If you filed a previous Chapter 7 bankruptcy less than 8 years ago and received a discharge, you will be unable to have your debts discharged in a new Chapter 7 bankruptcy.
If you filed a Chapter 13 bankruptcy less than 2 years ago and received a discharge, you will not be able to receive a new Chapter 13 bankruptcy discharge.
What property is exempt from being taken by the bankruptcy trustee?
Your home, up to a value of $100,000; $7,500 in personal property ($15,000 for a married couple); an automobile worth up to $7,000 for each individual; retirement funds; and a number of other items of lesser value.
What types of debts will not be discharged in my bankruptcy?
Usually, criminal fines, taxes less than three years past due, student loans, alimony, child support, court ordered restitution, and debts arising from theft, fraud, malicious injury to another person or a DUI will not be discharged in a Chapter 7 or Chapter 13 bankruptcy.
What will happen if I am behind on my mortgage?
In a Chapter 13 bankruptcy, you can include these past due amounts, called arrearages, in your plan payment.
In a chapter 7 bankruptcy, it is important that your mortgage payments are current. If they are not current, the lender may be able to obtain the court’s permission to take back the home.
What will happen if I am behind on my car loan?
If you file a Chapter 13 bankruptcy, any past due payments on car loans can be included in your plan payment.
However, it is important to be current on car loan payments when you file your Chapter 7 bankruptcy otherwise the lender may obtain the court’s permission to repossess the car.
What happens to my child support or alimony payments?
Your child support or alimony payments can be included in a Chapter 13 repayment plan, but any remaining unpaid balance will not be discharged at the completion of your case.
Child support and alimony payments are not discharged in a Chapter 7 bankruptcy. You will need to continue making these payments during the pendency of your bankruptcy case.
What happens to my student loan payments?
Student loan debt can be included in your Chapter 13 repayment plan, but the balance remaining after your case is closed will not be discharged.
You will still be responsible for your student loans after you are granted a discharge in a Chapter 7 bankruptcy.