Bankruptcy is a valuable tool provided by the government to grant individuals like you the chance for a fresh start. Chapter 7 bankruptcy is one of the options available to consumers and involves the sale of your nonexempt property to pay off debts. The other alternative, Chapter 13 bankruptcy, involves the development of a repayment plan instead.
Both of these require you to attend a 341 meeting, or creditors’ meeting. This is a meeting with your bankruptcy trustee, your legal representative if you choose to have one and your creditors (in some cases). While this may seem like a scary prospect, it is usually simple and often short, sometimes ending in under five minutes.
The 341 meeting is just the process of making sure all of the necessary information is right, trying to spot out possible estate administration problems and identifying nonexempt property. The goal is for the trustee to review the details and check their accuracy. It is not a court hearing, and, in spite of its name, your creditors may not even be there. The meeting is not for them to pressure you. In most cases, they opt out since it is basically an information session.
Your bankruptcy trustee puts you under oath to be honest and verifies your identity by asking to see your photo ID and a document showing your social security number. Said trustee then asks you required questions and may ask some discretionary questions. These may be about nonexempt assets (for Chapter 7), repayment plan setup (for Chapter 13), income, child support, spousal support or other factors.
The idea of a 341 meeting is intimidating to many. However, as long as you answer all questions truthfully, it usually is not as bad as you may think.
Bankruptcy allows you to wipe your debt clean to start over. It can help you rebuild your credit and learn to manage your money wisely.
There are also benefits to be had during the bankruptcy process.
Once you file for bankruptcy, the courts send an order to all your creditors preventing them from starting or continuing to take action to collect debts. It suspends the proceedings until the completion of the bankruptcy process.
The automatic stay, however, does not have the power to stop:
Filing for bankruptcy a second time in the same year may give you the option of requesting an extension of the first automatic stay.
Bankruptcy gives you the ability to discharge debts to give you a fresh start. The discharge releases you from liability for the debt and keeps the creditors from going after you. Most Chapter 7 filers get the discharge after the completion of the bankruptcy process.
If you file a Chapter 13 bankruptcy, a discharge is not as easy to get. The courts may allow you to discharge non-priority unsecured debts. Some of these include credit card balances, personal loans and medical bills.
Bankruptcy law allows you to keep all or part of your property away from creditors. These exemptions may include your home, furniture and items you use for business.
Neither Mississippi nor Tennessee allows you to choose to take federal exemptions.
Bankruptcy is a means for you to begin again financially. Take the time to look over how the process can work for you.
For many Americans, debt has reached crisis levels. In fact, the average person in the U.S. owes roughly $93,000 to creditors. This figure includes about $5,000 in credit card debt and more than $16,000 in personal loans.
While having some debt usually makes good financial sense, accumulating too much may ruin both your credit score and mental health. Fortunately, a bankruptcy attorney may be able to help you make a fresh start in three critical ways.
There should be more to life than constantly struggling to pay monthly bills, credit card minimum payments, medical expenses, student loans and other debts. If you fall behind, though, you may experience anxiety every time the phone rings or you walk to the mailbox. Your bankruptcy attorney can probably stop collections activities in their tracks, at least temporarily.
Your bankruptcy attorney should explain all your options for debt relief. Depending on the type of bankruptcy you choose, you may be able to discharge many of your outstanding debts. Alternatively, you may be able to come up with a repayment plan you can afford. Either way, you may be able to keep many of your assets.
After your bankruptcy process concludes, you are likely to have additional resources to devote to your remaining debts. Rather than constantly worrying about paying bills, you can prepare a workable budget.
If you stick to your budget, your credit score is likely to rise. Your bankruptcy attorney may recommend other ways to secure your financial future. Addressing your debt proactively, though, is likely the first step on your road to financial recovery.
The repayment term for Chapter 13 bankruptcy is three to five years. During that time, it is not uncommon for some people to experience changes in finances that interfere with their ability to stay current on their bankruptcy obligations.
Job loss, serious illness, death, and divorce are some of the many reasons why some people encounter difficulty making their bankruptcy payments. Fortunately, the law offers the following solutions for people who are unable to pay their Chapter 13 bankruptcy payments.
Chapter 13 bankruptcy allows eligible debtors to suspend payments for short-term financial emergencies. To qualify, trustee approval is necessary and the suspension term is three months or less.
Chapter 13 bankruptcy plan modification is an option for debtors who are experiencing a temporary setback in their ability to make on-time payments. The interruption must last longer than three months. Debtors must also maintain an income level that allows them to make ongoing Chapter 13 payments. Debtors who pursue dismissal do not retain the protection of the automatic stay and are subject to debt collection calls, wage garnishments and foreclosure or repossession.
Changes in income like job loss, hospitalization, etc., that cause long-term income loss or an inability to pay are generally not eligible for modification. There are also circumstantial limitations to bankruptcy plan modifications.
Depending on the cause of their current financial challenges and amount of income, debtors may not qualify for bankruptcy modification but qualify for Chapter 7 bankruptcy protection if their income passes the means test. Chapter 7 can help those experiencing long-term financial stress to start over when they are no longer able to meet Chapter 13 bankruptcy requirements.
Bankruptcy is a federal court procedure that allows people to get rid of debt and repay creditors. The intent of bankruptcy is to give people a fresh start.
Bankruptcy is not a magic pass that allows you to erase your entire past, but it can make your present easier and your future possible.
After filing for bankruptcy, bankruptcy court will protect you during the proceedings. The court will issue an automatic stay order that prevents many things from going forward. It will stop harassment from creditors and collections agents. It will temporarily stop foreclosures, repossessions or eviction. It will even stop wage garnishment.
Bankruptcy can wipe out unsecured credit card debt. It can also wipe out secured debts such as a mortgage, or a car payment, but you will have to give up the property. Bankruptcy can erase medical bills and unpaid utility bills. There are even some lawsuit judgments bankruptcy can wipe out.
While bankruptcy intends to give people a chance to start over, some debts will remain yours to pay. Student loans, income taxes owed, court ordered payments of child support or alimony, and court fines or penalties are exempt from the powers of bankruptcy.
There are two types of bankruptcy open to individuals. Which type of bankruptcy you file for is dependent on your debt, income and property. Chapter 7 bankruptcy involves the liquidation of your assets in order to repay debts. Chapter 13 bankruptcy involves working with the court to design a plan to repay your debts and creditors over a fixed number of years based on your income and the amount owed.
