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Understanding How Personal Bankruptcy Works

When people are struggling with too much debt, they may have to consider bankruptcy as an option. Chapter 7 bankruptcy is one type of bankruptcy that can help people get a fresh start. This type of bankruptcy is a liquidation bankruptcy, which means the debtor’s assets are sold to pay off creditors.

The process can be complex and it’s important to understand how it works before making any decisions.

How Does Chapter 7 Bankruptcy Work?

Chapter 7 bankruptcy is also known as a straight bankruptcy or liquidation bankruptcy. It is the most common type of bankruptcy in the United States. In a Chapter 7 bankruptcy, the debtor’s nonexempt assets are sold by a trustee and the proceeds are used to pay creditors. Any remaining debt is then discharged.

To qualify for Chapter 7 bankruptcy, the debtor must pass the means test. This test looks at the debtor’s income and expenses to see if they can afford to repay their debts. If the debtor’s income is below the median income for their state, they will automatically qualify. If their income is above the median, they will need to provide more information about their expenses to see if they qualify.

Once the debtor has filed for Chapter 7 bankruptcy, they will need to attend a meeting of creditors. This meeting is also known as a 341 meeting. At this meeting, the trustee will ask the debtor questions about their debts and assets. Creditors may also attend this meeting and ask the debtor questions.

After the meeting of creditors, the trustee will sell the debtor’s non-exempt assets and use the proceeds to pay creditors. Any remaining debt is then discharged. The debtor will no longer be responsible for repaying this debt.

Chapter 7 bankruptcy can be a complex process, so it’s important to understand how it works before making any decisions. If you’re considering bankruptcy, speak with an experienced bankruptcy attorney to learn more about your options.

When people are struggling with debt, they may have to consider filing for bankruptcy. Chapter 7 bankruptcy is a liquidation bankruptcy, which means the debtor’s assets are sold to pay off creditors. The process can be complex and it’s important to understand how it works and to speak with an experienced bankruptcy attorney before making any decisions.

 

Learning how bankruptcy works

 

How Does Chapter 13 Bankruptcy Work?

Chapter 13 bankruptcy is a reorganization bankruptcy, which means the debtor creates a repayment plan that will allow them to pay back their debts over time. This type of bankruptcy can be a good option for people who want to keep their assets and repay their debts over time. It’s important to understand how Chapter 13 bankruptcy works before making any decisions.

When people are struggling with debt, they may have a number of different options for how to address the problem. One option that is available under the U.S. Bankruptcy Code is Chapter 13 bankruptcy. This type of bankruptcy is a reorganization bankruptcy, which means the debtor’s assets are not sold to pay off creditors. The process can be complex and it’s important to understand how it works before making any decisions. In this article, we will explain how Chapter 13 bankruptcy works and discuss some of the benefits and drawbacks of this type of bankruptcy filing.

Under Chapter 13 bankruptcy, the debtor is allowed to keep their assets and repay their debts over a period of time, typically three to five years. The repayment plan is approved by the bankruptcy court and must be followed in order for the debtors to receive the discharge of their debts. In order for a Chapter 13 bankruptcy to be filed, the debtor must have a regular source of income and their unsecured debts must be less than $394,725.00. (For secured debts, such as a mortgage or car loan, there is no limit on the amount that can be owed.)

Once the Chapter 13 bankruptcy petition is filed with the court, an automatic stay goes into effect. This means that creditors are prohibited from taking any collection actions against the debtor. This includes wage garnishments, foreclosure proceedings, and collection calls. The automatic stay gives the debtor some relief from creditor harassment and allows them to focus on completing their repayment plan.

Under the terms of the repayment plan, the debtor must make regular payments to their trustee. The trustee then uses those funds to pay the creditors in accordance with the priority set forth in the bankruptcy code. Secured creditors are paid first, followed by priority unsecured creditors (such as child support or alimony), and then general unsecured creditors (such as credit card debts). Creditors are only paid a portion of what they are owed, and they usually receive less than they would if the debtor’s assets were sold in a Chapter 7 bankruptcy.

Once the repayment plan is completed, the debtor receives a discharge of their remaining debts. This means that the creditors are no longer able to take any action to collect the debt from the debtor. The debtor is then free from their debt obligations and can move on with their life.

Chapter 13 bankruptcy can be an effective way to deal with debt, but it’s important to understand how it works before making any decisions. If you are considering filing for bankruptcy, you should speak with an experienced bankruptcy attorney to discuss your options and whether Chapter 13 is right for you.

Seek Out an Experienced Bankruptcy Attorney

The decision to file for bankruptcy is a difficult and lengthy one that should not be done without the legal guidance of a bankruptcy attorney that you trust. At Parker & DuFresne, we provide relief, restoration, and renewal through a compassionate approach.

Our goal is to get clients across Northeast Florida back on the road to financial stability. We specialize in bankruptcy law. Through a thorough consultation, our attorneys will help you determine if bankruptcy is the right solution for you. Contact us today to learn more!

 

Schedule Your Bankruptcy Consultation with Parker & DuFresne

 

If you have any other questions about the process of filing for bankruptcy, be sure to contact an attorney.

Contact us today to learn more!

If you’re thinking about filing for bankruptcy in Florida, it’s important to meet with a bankruptcy attorney. You can better understand your specific situation and the types of relief that might be available to you.

Call us today for a free consultation and we’ll get you on your path toward financial freedom.

Where Can I Find Help?

Dealing with bankruptcy doesn’t have to be a single-person job. The bankruptcy lawyers at Parker & DuFresne will help you determine the best course of action to help you get out from under your debt and move forward to a debt-free future.

Call today at 904-733-7766 for a free consultation, or click the button at the top of the page to schedule online.

Parker and DuFresne

Parker and DuFresne
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