Chapter 7 Bankruptcy is also known as complete liquidation. Except for the State specific exemptions, ALL property a Debtor owns may be liquidated to pay of the Debtor's Creditors. After the 2005 bankruptcy laws, strictly limiting a Chapter 7, Debtor needs to collect various documents, including but not limited to 4 years of State and Federal tax returns, 6 months of Pay advices and bank statements. Debtor is more or less tied to month and the very moment that month expires, Debtor may need to collect more recent pay advices and bank statements to file. The Debtor must take a credit counseling course before he or she files-- and debtor education course after she files.
Debt Overload: Intro to a Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is not a complete liquidation but a more or less partial liquidation. If Debtor owns a house or a car, has back payments or arrears and really needs the house or car, he or she may file a Chapter 13 Bankruptcy. In fact, Debtor cannot pursue a Chapter 7 Bankruptcy without paying back all of the arrears if he or she intends to keep that specific property. Debtor may also file a Chapter 13 Bankruptcy if he or she makes over the median income in his or her State. The documents and courses needed for filing the case are virtually identical to the documents and courses needed for a Chapter 7 Bankruptcy, except in Chapter 13 Bankruptcy there is a Chapter 13 Plan--the monthly Trustee payments .
After filing a Chapter 7 and Chapter 13 Bankruptcy: 341 Meeting and Beyond
After filing the Chapter 7 or a Chapter 13 Bankruptcy case, Debtor will meet his Chapter 7 Trustee or Chapter 13 Trustee assigned to his case in 30 to 45 days. The Trustee will have questions for the Debtor. Chapter 7 Trustee may have 5 minutes of questions but a Chapter 13 Trustee questions will be more in depth. After the Chapter 7 Debtor's 341 Meeting, he or she will have 60 days to be eligible for a discharge. The waiting period of 60 days is written into the federal bankruptcy laws. Chapter 7 Debtor's case is completed when he or she gets a discharge order and case closes or he or she gets a dismissal and case closes. A discharge means Debtor's debt is wiped clean. A dismissal means the debt still remains.
After filing a Chapter 7 and Chapter 13 Bankruptcy: 341 Meeting and Beyond (Con't)
After the 341 meeting, Chapter 13 Debtor has to wait for the Confirmation date. The Chapter 13 Debtor needs his Plan to be confirmed. If confirmed, Chapter 13 Debtor knows for certainty what his or her monthly payment is to the Chapter 13 Trustee. If Chapter 13 Debtor chose to file a Chapter 13 Bankruptcy because he or she had back payments or arrears in his or her house or car and Debtor had less than the median income in his or her State, then he or she may choose between a 3 year, 4 year or 5 years Plan as long as the Trustee agrees. If Debtor makes has more income than the median, then Debtor must follow a 5 year Plan. The the end of required number of years, Debtor will qualify for a discharge. Debtor may get a dismissal anytime for a variety of reasons.
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