Dunbar Law Pc. Personal Bankruptcy.

Filing for bankruptcy is an important decision, and Dunbar Law wants to make sure that the type of bankruptcy protection that you choose is the right one for you.

Chapter 7.

Generally, a debtor's major interests in a chapter 7 case are to retain exempt property and obtain a discharge that covers as many debts as possible. A discharge releases the debtor from personal liability for discharged debts and prevents the creditors owed those debts from taking any action against the debtor, or his or her property, to collect payments.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a federal court process that liquidates your debts. Both individuals and businesses can file for Chapter 7 bankruptcy, and they must file at the bankruptcy court assigned to the area where they live or where their company is located.

In all cases a trustee is appointed by the court to liquidate certain assets that belong to the debtors to pay off as many of their debts as possible. Unlike other bankruptcy filings, a Chapter 7 bankruptcy does not require a repayment plan. Filing a Chapter 7 bankruptcy is an opportunity for an individual to get a fresh start and be discharged of credit card and other kinds of unsecured debt. An automatic stay is issued once a debtor files for bankruptcy that immediately stops lawsuits filed by creditors, as well as any other actions that others might try, such as foreclosure, eviction, and the shutting down of utilities.

Some debts are not discharged in Chapter 7 such as student loans, taxes, child support obligations and alimony, cash advances and purchases of luxury items in excess of $1,000 within 90 days prior to filing bankruptcy.

For Individuals Filing Chapter 7 "Consumer" Bankruptcy:

Since October 2005, a new bankruptcy law has added new requirements to the bankruptcy process for individuals who wish to file. One of these requirements is passing the means test. In Massachusetts, the current median income is:

Single Earners: $43,107

A Family of Four: $70,172

The debtor's average income for the last six months is compared to their state's median income. If the debtor passes the means test (meaning that their income is equal to or less than this median), then he or she is allowed to file for Chapter 7 bankruptcy. If the debtor doesn't pass the means test, they may be asked to file under Chapter 13 bankruptcy. Individuals filing for Chapter 7 or Chapter 13 bankruptcy must take a credit counseling course within 180 days prior to filing for bankruptcy protection.

Chapter 13.

Chapter 13 Bankruptcy, also called Reorganization Bankruptcy, enables financially distressed individual debtors to propose and carry out a repayment plan that will allow them to pay back creditors over an extended period of time. Companies are not allowed to file under Chapter 13 for bankruptcy protection. A person who owns a business, however, can file as an individual for Chapter 13 bankruptcy and include business-related debts as part of their debts.

A person filing under Chapter 13 bankruptcy must show the courts that they have the resources to pay their debts over the next three to five years. Otherwise, a judge will not approve the repayment plan.

Under an approved Chapter 13 plan, a bankruptcy trustee appointed by the court will make the payments to the creditors.

Debts that must be paid in full include.

• Wages you owe employers.
• Any taxes that you owe.
• Any owed child support or alimony.
• Mortgage payments that you owe.
• Car payments.

Unsecured debts cannot be greater than $336,900, and secured debts cannot be higher than $1,010,650.

Chapter 13 Income Test.

In order to qualify for Chapter 13 bankruptcy, your income must not be less than a certain minimum to ensure that you can pay your debts. Sources of income to fund a chapter 13 plan can include:

• Any wages earned through employment.
• Any income earned through self-employment.
• Social Security benefits.
• Alimony or child support.
• Unemployment or disability benefits.
• Royalties.
• Rents.
• Residuals.
• Pension payments.
• Proceeds from the sale of businesses or properties.

Credit Counseling Course.

As with a Chapter 7 bankruptcy, a person who wishes to file a Chapter 13 bankruptcy petition must first take a credit counseling course. Upon completion of this course, the debtor must present their certification of completion to the bankruptcy court, along with the many forms they will be required to fill out, their tax returns over the past five years, and a detailed repayment plan.

Automatic Stays.

The filing of the petition under chapter 13 "automatically stays" most collection actions against the debtor, or the debtor's property, while a repayment plan is worked out under the supervision of the courts. As long as the "stay" is in effect, creditors generally cannot initiate or continue any lawsuits, make wage garnishments, or even make telephone calls demanding payments.

For example, by virtue of the automatic stay, an individual debtor faced with a threatened foreclosure of the mortgage on his or her principal residence can prevent an immediate foreclosure by filing a chapter 13 petition with the bankruptcy court's divisional office. Chapter 13 then gives the debtor a right to cure defaults on long-term home mortgage debts by bringing the payments current over a reasonable period of time.

Dunbar Law Pc.

Our attorneys at Dunbar Law P.C. are committed to helping you through the Chapter 13 bankruptcy process. We are a debt relief agency that helps people file for bankruptcy relief under the Bankruptcy Code. We can help you develop your repayment plan so you can reorganize your financial life.