Chapter 7 Bankruptcy
Both individuals and businesses are allowed to file for Chapter 7 bankruptcy. When an individual files such a bankruptcy, it is referred to as a consumer Chapter 7 bankruptcy. When a business files a Chapter 7 Bankruptcy case, essentially for the purposes of liquidation, it is referred to as a business Chapter 7 Bankruptcy. These bankruptcy cases will typically last between three and six months with more complicated cases spanning from six to 12 months or longer. A Chapter 7 Bankruptcy is commonly referred to as a “straight bankruptcy” in that upon the filing of the bankruptcy with the court, an automatic stay immediately goes into effect, ceasing all collection activities, thus providing an opportunity for the filer to cash his or her breath. Upon the entry of the Discharge (the order from the court relieving the filer of all obligations and liabilities on those debts listed in their schedules) the filer obtains a “fresh start” allowing the filer to begin anew having eliminated most, if not all, of their debt, retaining their exempt property and starting all over again. .
Before you can file for Chapter 7 bankruptcy, you must be able to show that you are eligible to file for the protection offered by a Chapter 7. The eligibility to file such a case hinges on the type of debt you owe, such as consumer debt or business debt, and also on your monthly household income based upon a six month look back.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy protection is designed for individuals with regular income who are temporarily unable to pay their debts and would like to pay them in installments over a period of time. You are eligible for Chapter 13 if your secured and unsecured debts do not exceed certain dollar amounts set forth in the Bankruptcy Code. You must file a Plan with the Court explaining how you propose to repay your creditors all or part of the money that you owe them, using your future earnings. Usually the period allowed by the Court to repay your debts is five years but no less than three years. You may keep all your property, both exempt and non-exempt, as long as you continue to make payments under the Plan.
Chapter 11 Reorganization
Chapter 11 bankruptcy is usually a proceeding for the reorganization of a debtor engaged in business. Under some circumstances, it is available to consumers as well. Under Chapter 11, the debtor is typically a business that is seeking to reorganize its debts in such a way as to enable the struggling business to continue operating into the future.
Chapter 12 (Farm) Reorganization
Chapter 12 bankruptcy is a separate section of the bankruptcy code that specifically provides debt restructuring for family farms and family fisherman. Chapter 12 allows family farms to reduce debt load and restructure debt so that the farm may become viable in the future. Both persons and business entities engaged in a farming operation are eligible for Chapter 12 Bankruptcy protections.
Facing your 341 hearing
Upon the filing of your bankruptcy case, you must attend a meeting of your creditors, who are permitted to inquire about the information you’ve submitted regarding your financial situation. This meeting of creditors is usually referred to as the 341 Meeting or hearing. It will be held in the courthouse where your bankruptcy was filed or, if you have filed a Chapter 13, in the office of the Chapter 13 Trustee.
In the vast majority of bankruptcy cases filed, few creditors ever appear at the 341 Meeting to inquire into the filer’s financial information. The 341 Meeting is conducted by a bankruptcy trustee, a lawyer appointed by the bankruptcy court who will question you regarding the information and assets identified on your schedules. Our attorneys are very experienced and skilled with the handling of all bankruptcy related matters and will accompany our clients throughout the bankruptcy process, including the 341 hearing.
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