There are certain rules that govern your decision. For instance, if you received a discharge in a Chapter 7 case, you may not file another case for eight years. However, you may still be able to file under Chapter 13. You should discuss with your attorney the advantages of filing under each chapter.
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When the court grants you a discharge, it means your obligation to repay your creditors is gone. In a Chapter 7, you also must complete a financial management course by telephone or computer. Additionally, in a Chapter 13, you must have made all your monthly payments to the court.
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The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a “fresh start” by exempting property from the estate. The vast majority of bankruptcy cases are “no asset” cases, meaning that there are no nonexempt assets which the trustee is going to administer in order to pay creditors. You can keep your clothes, household furniture, pets and musical instruments. A car or truck up to $7,500 of equity is exempt. A home is also exempt up to $35,000 of equity. Other things that you own are not strictly exempt and may not be worth the trustee’s trouble to sell. Of course, by the time you file your bankruptcy petition, you and your attorney will have thoroughly reviewed your situation in order to determine if there are any assets at risk.
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As discussed elsewhere in this site, in order to determine whether or not you are eligible to file under Chapter 7, a “means test” is utilized. If your income is above the state median level for a household size the same as yours in the parish in which you reside, analysis of your expenses is necessary. Some of these expenses are not your actual expenses, but rather are national and regional standards, and some are your actual expenses. If, after deduction of these expenses, your “disposable income” is less than a certain amount, then you are permitted to file a Chapter 7 without involving a presumption of abuse. If your income is over that amount, then you will be forced into a Chapter 13 proceeding.
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You must list all your creditors, even though you may not want to. Clients often tell me that for some reason they do not wish to list a creditor. Sometimes they indicate that they are current with their payments with a creditor, maybe a home mortgagee or a car lender, and do not wish to disturb their good relationship with the creditor. I have to advise them that the Bankruptcy Code requires that all debts be listed. This does not necessarily mean that the relationship with the creditor will be damaged. If the creditor has a security interest in some property, such as your home or vehicle, usually the creditor and debtor enter into a “reaffirmation agreement.” This is a special document which is also signed by your attorney and is filed with the court. The effect of the reaffirmation agreement is to again make the debtor legally responsible for the debt. The creditor usually is very happy to enter into this agreement. After all, the creditor would much rather have you pay the debt than to go to the expense and hassle of seizing and selling the collateral, usually at a loss. If the debt is an “unsecured” debt, meaning that there has been no property pledged to “secure” the debt, it almost always is not advisable to reaffirm the debt. The reason for this is that there is no benefit such as retention by the debtor of secured property to justify the reaffirmation of the debt. To reaffirm the debt, and consequently to be obligated to repay it, prevents a true “fresh start”, which, after all, is the purpose of filing a Chapter 7 bankruptcy. Having said that, however, the Bankruptcy Code allows you to pay any debt on a voluntary basis, if you wish to do so. Whether this is advisable is questionable and is an issue to be discussed with your attorney.
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Yes, most probably. There are two questions which must be addressed.
Will the trustee take the car? The first consideration is to determine whether the trustee will administer the vehicle (take it and sell it to pay creditors). If there is little or no equity in the car, after subtracting any car loan from the car’s present value, the bankruptcy trustee will not take the car. If there is equity in the car over and above the value of the exemptions available, a debtor can usually buy any unprotected equity from the Chapter 7 trustee, if necessary. Your vehicle is exempt up to $7,500 in equity value (the value remaining after subtracting the amount of any loan against it from the NADA retail value). Additionally, if the vehicle has been modified to accommodate a physically infirm person, then there is a $7,500 exemption available.
Will the creditor take the car? If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car, and continue paying under the existing terms; or you can buy the car from the secured creditor for its present value (redemption), usually in a single payment. Your creditor will be quite willing for you to reaffirm the debt. In a Chapter 7, the creditor usually requires you to be current with your payments at the time the reaffirmation agreement is signed. Of course, if you choose, you can surrender the car and be free of any obligation to pay for it.
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Yes. As soon as your case is filed, creditors must stop whatever collection efforts are underway, including garnishment. The only exception may be for ongoing child or family support ordered by a court. The discharge of a debt will forever eliminate a creditor’s right to garnish your wages on account of that debt.
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No, there is no requirement that both spouses file, either under Chapter 7 or Chapter 13. In some situations, it might not be necessary. For example, in Louisiana, which is a community property state, a debt incurred during the existence of a marriage is presumed to be a community debt, and therefore owed by both spouses. (This presumption can be overcome if the debt was not incurred for the benefit of both spouses or the one who had not incurred the debt). Even if only one spouse files a bankruptcy petition, the bankruptcy discharge is effective as to the other spouse with regard to the community debts. Assuming that all debts are community in nature, one might then ask why it would ever be necessary for both spouses to file. Two reasons come to mind. First, the presumption that a debt is community is just that—only a presumption. It can possibly be overcome, and a creditor may attempt to do so. Second, creditors, especially those located out of the state of Louisiana, may be ignorant of this rule, and assume that the discharge does not cover the non-filing spouse, In either event, needless harassment or even litigation may ensue. Since one of the goals of filing bankruptcy is to obtain protection from creditors, it often is advisable for both spouses to file. If only one spouse has debt and it is clear that this debt is separate, not community (for example, if the debt was incurred prior to the marriage), then it is not necessary for both spouses to file.
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If your total liabilities are greater than your total assets you should consider filing for bankruptcy. Speak with a bankruptcy attorney find out exactly how bankruptcy would affect you.
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It is a legal proceeding in which a person seeks protection from his creditors. A bankruptcy suit is filed in federal court. The person who files bankruptcy is known as the debtor.
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Chapter 7 is a liquidation. Your nonexempt assets are distributed to the creditors according to certain rules. A Chapter 13 bankruptcy is a repayment plan. You must make a monthly payment to a trustee appointed by the court. The trustee then distributes these payments to your creditors.
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Certain debts are not discharged. Tax debts, student loans and domestic support obligations are the most common exceptions. These debts survive the bankruptcy.
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That is up to the individual creditors and how they assess your creditworthiness. If you file a Chapter 7, the creditor knows you cannot file another Chapter 7 for eight years. Once the bankruptcy case is closed, credit usually becomes available to my clients. At first, it may be a credit card with a high interest rate and a low credit limit. Mortgage lenders usually want to see two years of good credit history after a bankruptcy. There is no “right” to credit, and landlords and credit card companies are well within their rights to consider your financial history in their credit decision. However, debtors are protected from discrimination based solely on the fact that they have filed bankruptcy by provisions of the Bankruptcy Code. While the fact that you filed bankruptcy stays on your credit report for up to 10 years, it becomes less significant the further in the past the bankruptcy is. In fact, you may well be a better credit risk after bankruptcy than before.
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When you file a bankruptcy, the law imposes an automatic delay on legal proceedings, including foreclosures, but this may be good only for a limited time. To save your house, you must file a Chapter 13, which will propose to repay the money you owe to your mortgage company over the length of your bankruptcy, which is 36 to 60 months. You will also have to make your regular monthly payments during this time. If you make all your payments, you will emerge from bankruptcy current on your mortgage.
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Generally, while your case is open, your tax refunds can be taken by the trustee and distributed to your creditors. In some cases, the trustee decides it is not worth his trouble, and returns the refund to the debtor.
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A Chapter 13 bankruptcy lasts no less than 36 months and no longer than 60 months. A Chapter 7 case is usually over in about four months. There can be exceptions.
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No, the Bankruptcy Code prohibits a private employer from discriminating against an employee or prospective employee solely because of a bankruptcy.
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No. Again, the Bankruptcy Code strictly prohibits denial of a loan because your or someone with whom you have been associated has filed bankruptcy.
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