What is Bankruptcy?
Bankruptcy is a process in which consumers and businesses can eliminate or repay some or all of their debt under the protection of the federal bankruptcy court. Bankruptcy relief generally comes in two types: liquidation or reorganization. Of these two types, the vast majority of cases are filed under Chapter 7 or Chapter 13.
What is Chapter 7?
Chapter 7 bankruptcy is a liquidation type bankruptcy. This may be filed by individuals or businesses. It is considered a liquidation bankruptcy because a trustee is appointed to oversee and sell the assets of the individual or business to the extent that the assets cannot otherwise be protected with an exemption. The proceeds from non-exempt assets that are sold are then distributed to creditors. For individuals, the state and federal government provide many exemptions that allow most debtors to keep most, if not all, of their existing assets.
What is Chapter 13?
Chapter 13 is a reorganization bankruptcy for individuals. It allows them to setup a payment plan to pay their creditors back over a period of 3-5 years. It has the advantage of allowing individuals to keep all of their property during repayment while shielding them from creditor’s debt collection efforts (bills, lawsuits, garnishments, etc.) during repayment. There is no forced liquidation or loss of assets in a Chapter 13 case.
Do I qualify to file Chapter 7?
Whether you qualify to file for Chapter 7 bankruptcy generally hinges on the amount of income you make and your household size. The amount of allowable expenses that the court allows increases with the amount of dependents in your household. Therefore the greater the income and the lesser of people in the household the more likely you may not qualify for a Chapter 7 case and instead may have to file Chapter 13. There are other considerations such as the amount of assets you have and certain financial transactions that may impact your decision to file Chapter 7, even if you qualify. It’s important to have the Moldovan Law Firm review your complete financial situation to determine whether you should file Chapter 7.
Can I file bankruptcy without an attorney?
You are not required to have an attorney in order to file bankruptcy. However, I can’t tell you how many times I have seen people in bankruptcy court who have not filed the proper documents or have not filed them correctly and have had their cases dismissed or their discharge denied. Sometimes they lose significant assets (including homes and cars) that they may have otherwise been able to keep had they been represented by a competent bankruptcy attorney.
What are the Costs to File Bankruptcy?
The costs for filing bankruptcy include the following:
- Filing Fee – The filing fee for Chapter 7 cases is $335. The filing fee for Chapter 13 case is $310.00.
- Credit Counseling / Debtor Education courses – A credit counseling course is required to be taken prior to any individual bankruptcy filing and must be done within 6 months of the filing of the case. This course can be done over the phone or on the internet and usually takes 1 hour to complete. The cost for the pre-filing course varies depending on the credit counselor, but generally costs $9.95 to $30.00. A debtor education course is required to be taken after filing, but before discharge and the cost is similar to the pre-filing course.
Attorney Fee: Attorney fees vary depending on the complexity of the case. Moldovan Law Firm provides flexible payment options.