Chapter 7 Law Firm In Terre Haute Indiana
What Is The Difference Between Chapter 7 and Chapter 13 Bankruptcy?
In a Chapter 7 proceeding, you are asking the court to eliminate, or discharge the amount of debts allowed by Chapter 7 regulations. You may in addition, lose some assets, depending on the particulars of you situation. In Chapter 13, you will pay a portion of your debts while reorganizing others. You decision will be determined by the types and amount of debt you owe, your income, and the value of your assets. Rare is the situation in which you involuntarily lose assets under Chapter 13. Please consult with us prior to determining what is your best option.
Chapter 7 is referred to as “liquidation bankruptcy.” In a Chapter 7 case, you will file several forms with the court. These forms list income and expenses, assets, debts, and property transactions occurring in the past year. A court-appointed bankruptcy trustee will be assigned to oversee your case. Roughly one month after filing, you are required to attend the First Meeting of Creditors. At the meeting, the trustee reviews your forms and will ask a series of questions. If you have any non-exempt property, the trustee will as that you hand it over. The meeting is typically not lengthy. Absent challenges from any creditors, approximately three months later you will receive a discharge order, which is a notice from the court that “all debts that qualified for discharge were discharged.” At this point your case is complete.
Chapter 13 is referred to as “reorganization bankruptcy.” You are required to file many of the same forms that you would file in a Chapter 7 proceeding. In addition, you will file a proposed repayment plan, in which you detail how you intend to repay your debts over the course of the next 3-5 years. Some debts must be repaid in fill. Other debts require a percentage to be paid. Other debts are not required to be paid at all. Some debts will require interest payments. Some debts are paid at the beginning of your plan, whereas others are paid at the end of your plan. The Court will assign a bankruptcy trustee to oversee your case and handle your payment plan.
After filing, you will be required to attend a First Meeting of Creditors (6-7 weeks after filing). If the trustee approves your plan for payment, he or she will submit it to approval by the judge. Approximately 5 months after this meeting, the judge will typically confirm your plan if no creditor has opposed it.
If for some reason a creditor or the trustee objects to your plan, the judge will likely hold a hearing at the Confirmation Hearing to determine the status of your plan and hear the objection. If your plan is confirmed and you make all payments set forth within the plan, it will result in a discharge of any balance owed on all dischargeable debts at the end of your case. Please consult with us when determining which type of bankruptcy is your best option.
Who Can File A Chapter 7 Bankruptcy?
In order to file a Chapter 7 bankruptcy, you are required to have a place of residence, a place of business, or property in the United States. You are not required to be employed in order to file a Chapter 7 bankruptcy petition. In addition to these requirements, you must not have:
- complete a Chapter 7 bankruptcy within the last 8 years
- completed a Chapter 13 plan which paid your unsecured creditors less than 70 cents on the dollar within the last six years, or
- had a bankruptcy filing dismissed for cause within the last 180 days
- Have a household income, which is more than the median income in the state of Indiana for a household of your size.
Why Should I File A Chapter 7 Bankruptcy?
There are many reasons to file a Chapter 7 bankruptcy. Some of the most common reasons are not within the control of the debtor. You should be suffering from extensive medical expenses, unemployment, a familial crisis, marital problems, credit problems, unexpected failure of a business, or expenses beyond your control.
When Should I File A Chapter 7 Bankruptcy?
There are many factors to consider when determining whether or not to file a Chapter 7 bankruptcy at a particular moment. How far if at all have you fallen behind in debt payments? Are you dealing with a foreclosure, lawsuit, lien, or repossession? We can tell you when to file and when not to file. Some are the basics are:
- If a creditor threatens to attach or garnish your wages or bank account, file as soon as possible in order to protect your property.
- If a lawsuit threatens your exempt assets or future income, file as soon as possible in order to take advantage of the automatic stay associated with the filing of a Chapter 7 bankruptcy case.
- Do not file under Chapter 7 if you expect that you will acquire property through inheritance, divorce, or life insurance within the next 180 days. This property will have to be turned over to the trustee unless it is exempt.
- Do not file under Chapter 7 until you have received all non-exempt assets that you are entitled to. If you are entitled to receive an income tax refund or a similar nonexempt asset in the near future, do not file under Chapter 7 until after the asset or refund is received. If you file prior, the refund or asset may become property of the trustee.
- Do not file under Chapter 7 until all anticipated debts have been incurred. It will be another eight years before you are eiible for another Chapter 7 discharge.
What Debts Cannot Be Discharged in Chapter 7?
Indeed there are debts that cannot be discharged in Chapter 7 bankruptcy. We will help you determine which debts qualify for discharge under Chapter 7. Typically, the following types of debts are not dischargeable:
- Debts resulting from a divorce settlement agreement or decree of the court.
- Debts resulting from embezzlement, larcent, or breach of fiduciary duty.
- Debts resulting from willful and malicious acts.
- Debts resulting from fraud, including certain debts for luxury goods or services incurred within sixty days before filing and certain cash advances taken within sixty days of filing.
- Court fees.
- Debts resulting from driving while under the influence of alcohol or drugs.
- Debts not dischargeable in a prior bankruptcy because of the debtor’s fraud.
- Government-imposed restitution, fines, or penalties.
- Debts resulting from child support and spousal maintenance.
- Recent federal, state, and local taxes.
- Most student loans, unless repayment would cause the debtor and his or her dependents undue hardship.
- Debts or creditors not listed on the schedules filed in a case where the trustee collects non-exempt assets to pay creditors.
What Is The Role Of My Attorney In A Chapter 7 Case
Your attorney is the person who will be advocating for you in your case. It is his or her responsibility to review with you all of your options and guide you through your case from filing to completion. Ultimately the decision is yours, however, your attorney is responsible for:
- Reviewing and analyzing the amount and nature of your debts to determine the best remedy for your financial problems.
- Advising you on the relief available under Chapter 7 and Chapter 13 of the Bankruptcy Code, and how each option applies to your particular case.
- Putting together all of the information required to proceed with a Chapter 7 filing.
- Preparing your petition, schedule, statements, and other Chapter 7 forms for filing with the Indiana bankruptcy court.
- Assisting you in listing all of your assets in order for you to retain as many of the assets as possible following the Chapter 7 case.
- Filing the Chapter 7 petition, schedule, statements, and any additional forms with the Chapter 7 bankruptcy court.
- When applicable, notifying any creditors of the commencement of your proceedings.
- Assisting you when applicable in redeeming personal property, setting aside liens against exempt property, reaffirming certain debts, and carrying out the matters set forth in the debtor’s statement of intention concerning secured debts.
- Attending the First Meeting of Creditors with you in addition to attending any hearings on motions that may be filed in the case.
- Preparing and filing amended schedules, statements, and other documents when necessary with the bankruptcy court on your behalf.
What Assets May I Keep If I File For Chapter 7 Bankruptcy
Per Indiana Chapter 7 bankruptcy law, individuals may retain $9,350 of personal property. Married couples may retain $18,700 of personal property. Personal property includes household furnishings, boats, firearms, electronic equipment, vehicles, interest in a qualified retirement plan, etc. Personal property is valued at auction or garage sale prices for bankruptcy purposes. Any loans or liens on personal property are deducted from the value before being calculated for the purpose of bankruptcy.
Pursuant to Indiana Chapter 7 bankruptcy law, an individual may retain $17,600 equity in a residence when filing. Married couples may retain $35,200 equity in a residence. You equity is defined as the market value of your home after the amount of the mortgage is deducted.
The majority of funds held in retirement accounts and medical care savings accounts can be held after bankruptcy. There are further exemptions that we would be happy to discuss with you if if you are considering chapter 7 bankruptcy.
What Happens If I Have More Assets Than I Am Permitted To Retain?
If you have assets in value that is higher than you are permitted to retain by law, the Trustee can take some of them or sell them and use the money to pay your creditors. If you wish to retain your extra assets, you may do so by paying the extra value to the Trustee so that the Trustee may in turn pay your creditors. Depending on the amount involved, this could be done through Chapter 7.