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Bankruptcy Bankruptcy is a useful tool in this dwindling economy for those in serious debt, receiving harassing mail and phone calls from collectors. There are 3 type(s) of Bankruptcy. They are as follows: Chapter 7, Chapter 13, and Chapter 11. Chapter 13 Bankruptcy allows the debtor to prepare a plan to repay creditors over time, usually 3 to 5 years. Chapter 11 Bankruptcy is used for businesses that would like to file for Bankruptcy such as corporation(s), sole proprietorships(s), or partnership(s) Chapter 7 is the most common form of Bankruptcy for individuals. Chapter 7 Bankruptcy is also known as liquidation.The steps to filing for Chapter 7 Bankruptcy are as follows. First, a person known as the Debtor and/or Petitioner files for Chapter 7 Bankruptcy. Second, the United States Bankruptcy Court will appoint a Trustee to administer the case. Third, the Bankruptcy Court will notify the creditors of the bankruptcy filing, schedule the "Section 341" meeting of creditors, notify you and your creditors of the date and place of the meeting . Also, deadlines for objecting to your discharge, and for filing complaints to determine the dischargeability of a debt are set. Fourth, the "Section 341 Meeting" is held approximately 20 to 40 days after the case is filed. The Chapter 7 Trustee will conduct the meeting. You must attend and answer questions about your financial circumstances under oath. Fifth, if an objection to the discharge of a particular debt is filed, then you or your attorney must file a written response in a timely manner. Finally, the Chapter 7 Trustee will collect your non-exempt assets and sell them in order to pay off your creditors. The Trustee collects the assets of a debtor, reduces them to cash, and distributes the money to the creditors. The creditors, who are in most cases credit card companies, will be given an opportunity to file claims, which the Trustee will then review. If there are any objections to claims, then the court will resolve the dispute. Once all claims are resolved, then the Trustee will file a final account. If there are assets, they will first be distributed to pay the Trustee's fees and expenses, and then to your creditors according to their priorities under law. If there are no non-exempt assets, then the Trustee will forward a discharge to you.Most Chapter 7 Bankruptcy cases involve exempt property. This means that the debtor can retain certain property, and will not be forced to sell some of their assets and/or property to pay off their creditors. ( Such as your home, and motor vehicle(s) etc.). In most cases there are no assets that are available to be sold in order to pay off creditors. This is known as a "no-asset" case. Once a debtor receives a discharge, then he/she is relieved from personal liability for debts that are discharged, and is no longer responsible for making payments to that creditor. Depending on your particular case it could be somewhat of a lengthy process, but well worth it to protect your personal assets! The few disadvantages of Chapter 7 Bankruptcy are that it will not protect you from Federal, State, and Municipal taxes/liens. Also, you will not be exempt from paying off student loans. The benefit(s) of filing for Chapter 7 Bankruptcy is that one may be able to get a "fresh start". Filing for Chapter 7 Bankruptcy may also stop foreclosures from creditors, and it will stop creditors from contacting your home/work and harassing you for payment. Now isn't that a relief? This article was submitted by Attorney Teresa Persico to The Blackstone Enlightener, May 2001 issue, The Bellingham Bulletin and The New Uxbridge Times. The Law Office of Teresa Persico is licensed to practice law in the state of Massachusetts. The information provided in this Web Page Site is offered for informational purposes only, it is not offered and does not constitute legal advice. This Web Page Site is considered advertising under the rules of the Commonwealth of Massachusetts. E-mail: persicolaw@choiceonemail.com |