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Bankruptcy is a legal process whereby an individual can either obtain a full discharge of many of their debts or reorganize their financial situation and get on a payment plan. Which plan you choose is largely dependent on the unique facts of your situation, including, among other things, your household size, your income level, your expenses, debts, and assets.
Bankruptcy can often discharge your legal obligation on several debts. But whether a debt is dischargeable is a difficult question to answer sometimes and is again dependent on the type of debt. Debts stemming from credit cards, medical related expenses, back utility bills, pay day loans, deficiencies on repossessions, and other similar unsecured debts are generally dischargeable. Debts that are generally not dischargeable are debts related to fraudulent activities, owed child support and alimony, student loans, and most tax debt. These types of debts are handled in other proceedings.
There are several different types of bankruptcy, generally called “chapters” because of the chapter of the bankruptcy Code they stem from. The two most often used by individuals are Chapter 7 liquidation and to a lesser extent Chapter 13 reorganization. Businesses will often file Chapter 11 or Chapter 7. But there are special Chapters dedicated to Farmers and Commercial Fishermen, or if you have assets overseas.
Chapter 7 liquidation bankruptcy is generally the quickest, easiest, and cheapest way to progress through bankruptcy. In a Chapter 7, you provide the Court and the United States Trustee office a snapshot of your financial status, including, among other things, all income, expenses, debts, and assets. The key aspect of a Chapter 7 is the bankruptcy estate (your assets) will be sold to satisfy your debts, but several items are exempt from this sell, including a set amount of equity in your home and vehicles, retirement accounts, and several other items up to a certain value (this amount differs from state to state and West Virginia has its own exemptions) Many people can go through Bankruptcy and not lose a single asset they have. One important aspect of Chapter 7 is eligibility, if your income exceeds a certain threshold (based on household size), then you may not qualify for Chapter 7 and may have to file under Chapter 13.
Chapter 13 reorganization, or as it may be called, a wage-earners plan, is a bankruptcy chapter which permits you to discharge your debts after paying on them for a set period (usually 5 years). Under a Chapter 13, you will have to pay a portion of most of your debts back prior to discharge. One plus to this option is generally your assets will not be at risk of liquidation. Regardless of which option you believe is right for you, you should consult with an attorney well-versed in bankruptcy as your facts will affect which option is best for you.
As mentioned above, you generally don’t lose assets in bankruptcy unless you have a great deal of assets. But that doesn’t mean your assets are not at risk—importantly you need to speak with an attorney as each state provides for different asset exemption levels. West Virginia for instance provides that you may exempt up to $25,000 of value (equity) in a home in Chapter 7 ($50,000 if you an your spouse are filing jointly. But each state is different. In Chapter 13, generally none of your assets are at risk. But again it is important to speak to a knowledgeable attorney.
Which chapter of bankruptcy you end up employing in your case will depend heavily on factors unique to you and your situation. Chapter 7 is restrictive based on your level of income and household size, but even if you qualify for Chapter 7 there may still me reasons why you choose a different Chapter, including West Virginia’s specific state exemptions. Regardless, you should speak to an attorney before making your decision.
This depends. Bankruptcy is meant to provide the honest but unfortunate debtor a fresh start. It can wipe away debts and help you restart your life whether your debts became overwhelming because of bad decisions or situations out of your control. But Bankruptcy is not right for everyone and every situation. You may be better off negotiating payment plans or cutting your budget back. Bankruptcy provides a solution when things get too difficult.
No, there is not a certain amount of debt necessary for you to qualify for bankruptcy. Your unique situation and amount of debt will certainly dictate whether you should go bankrupt or whether a certain chapter of bankruptcy is better than another. But there is no minimum amount of debt to qualify for bankruptcy.
While there is no age qualification in the bankruptcy code, there may be issues with a minor filing bankruptcy based on the fact that children often lack legal capacity enter into contracts. Along those same lines, children may be able to void contracts and debts. In such a situation, you should consult an attorney.
Yes, you can certainly file bankruptcy on your own, but your chance of a successful discharge is significantly less than if you had an attorney helping you. Bankruptcy is a complicated process even in its simplest form, but people do file and do obtain discharges on their own.
The process for filing any chapter of bankruptcy is going to focus first on gathering information. The bankruptcy petition requires a tremendous amount of information and you need to provide it to your attorney. Once your attorney has this information, he will prepare your petition. After he has completed the petition, often he will meet with you to review the petition and it will be filed. This process usually is done quickly in a simple individual Chapter 7 bankruptcy, but can take considerably more time depending on the complexity of your case.
It depends on the type of debts you have. There are categories of debts that are non-dischargeable. Generally, credit card debts, medical debts, pay day loans, and other unsecured debts are dischargeable. But there are instances where even these debts are non-dischargeable, for example when they were fraudulently obtained. Nevertheless, bankruptcy may be able to eliminate most if not all of your debts, but you need to consult with an attorney to determine which debts may be eliminated.
It is important to know that everything that is filed in court, unless otherwise ordered sealed or anonymous by operation of law, is public record. But it is unlikely many will know or look for your bankruptcy, but it is possible. In West Virginia, bankruptcy filings are sometimes published in the legal notices section of the newspaper.
This will depend on the type of bankruptcy you file and whether your business is involved. If you are the owner of a small business, your business will be involved in the bankruptcy. Determining to what extent will depend on your circumstances and an attorney should be consulted to determine what is your best steps moving forward.
Generally, yes. Creditor’s attempts to collect debts are stopped (stayed) upon the filing of your bankruptcy petition. This also applies to wage garnishments and asset seizures. It is important to let your attorney know if you are facing a foreclosure, repossession, or any action by a creditor to collect a debt.
Generally, medical related debt is dischargeable.
Generally, no, Student loans can be discharged under specific circumstances, but it is rare. There are options for repayment that may help you manage this debt, especially if they are government loans. Regardless, it is best to speak with an attorney to determine what strategy you should take.
Generally, yes. All creditor’s attempts to collect debts are stopped (stayed) upon the filing of your bankruptcy petition. This also applies to repossessions, attachments, liens, foreclosures, wage garnishments and asset seizures. It is important to let your attorney know if you are facing any action by a creditor to collect a debt.
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The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. Walters Law Firm, PLLC looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and Walters Law Firm, PLLC.