What You Need To Know About Bankruptcy
What’s up family? This is your boy Ivan Hall, the credit King. Are you thinking about filing for bankruptcy? If so, here are a few things you should understand before you take up this journey. Bankruptcy is set in place for individuals or businesses to obtain relief from debts that they can no longer pay. You should be aware that bankruptcy is often abused.
Types of Bankruptcy
The most common types of bankruptcy are chapter “7” and chapter “13”.
Chapter “7” discharges all obligations while chapter “13” is a scheduled payback of debts. You can consider negotiating your debts which will have less impact on your credit if done correctly. You should not attempt debt negotiations if you do not have adequate funds to pay a settlement or reduced payoff. If you have no income and you cannot qualify for a debt management program. Filing for bankruptcy may be a good option at that point. Federal Courts have exclusive jurisdiction over bankruptcy cases, bankruptcy cases cannot be filed in state court. Each of the 94 federal judicial districts handles bankruptcy matters.
Primary Purposes of the Law of Bankruptcy
- To give an honest debtor a fresh start in life by relieving the debtor of most debts.
- To repay creditors in an orderly manner to the extent that the debtor has property available for payment.
Code 362 of the bankruptcy code.
It is enforcement to disallow creditors in an attempt to collect certain debts, pre-petition or possibly post-petition debts included in the bankruptcy. Basically, it means any attempt to collect a debt involved in bankruptcy can be a violation of the automatic stay or discharge injunction.
The automatic stay prohibits, creditors cannot attempt to collect debts listed in bankruptcy or they risk violating the automatic stay. Even an attempt to collect post-petition debts may be prohibited while the debtor is in bankruptcy.
Judgments that are pre-petition filed before BK are uncollectible no repossession or selling of property is allowed until the automatic stay is lifted or the BK is discharged. The starting or continuing of any administrative or judicial actions against the debtor that was started before the BK was petition was filed. All action must cease the second the petition is filed with the courts. Enforcing a pre-petition judgment against the debtor or anything that is considered property of the estate is prohibited.
Any action to obtain possession or to try and exercise control is prohibited. Any act to attempt to perfect a lien or enforce a lien against the property of the estate. The purpose of the automatic stay is to give the debtor breathing room to liquidate or protect his assets under Chapter 7 or to set up a plan Under Chapter 13, Chapter 12, or chapter 11 plan.
The automatic stay is in effect at the beginning of filing a bankruptcy petition and lasts until the discharge is granted. A dismissal occurs or if a motion for relief is granted. A creditor may try to obtain relief from the stay if the debtor has no equity in the property involved in the property is not necessary for a successful reorganization of the debtor’s finances or if there is a lack of adequate protection for the creditor.
Lack of adequate protection can be several things, no insurance on a vehicle or inadequate insurance such as comp and collision, then the creditor may ask for relief because his security interest is unprotected.
No equity in the property. The property you’re trying to protect has no equity and the creditor can seek relief on that basis.
Delinquency. This can be a car or secured loan that is delinquent, which is causing a depreciation plus no payments being made. This can be a valid reason for asking for relief from the stay no registration or driver’s license for the vehicle. If a creditor violates the automatic stay, a judge can award attorney’s fees and actual damages along with punitive damages.
If a creditor gets notice of bankruptcy, they can send a re-affirmation request to your attorney. If the attorney does not acknowledge the request, then the creditor can show up at the 341 hearing and ask then, many times creditors will ask a debtor to reaffirm with them. This is allowed if approved by the courts. creditors cannot enforce a reaffirmation that has not been approved by the courts that would be considered attempting to collect a BK debt. If you take out debt for the sole purpose of paying taxes. The debt may be non-dischargeable. Please seek professional help. If you are considering filing for bankruptcy. It’s not the end of the world.
You will bounce back and go get that money.