Bankruptcy - All You Need to Know

As bankruptcy attorneys, we found that the vast majority of our clients considering bankruptcy were overwhelmed by what they didn’t know.  While understandably complex to a layperson, the actual process of preparing for and filing a bankruptcy can be broken down fairly easily. So to help ease your nerves, we at Bankruptcy HQ give you: Bankruptcy – All You Need to Know.

Bankruptcy - What are the New Bankruptcy Laws

Personal Bankruptcy

In a nutshell, most individuals and married couples have two types of bankruptcy under the Bankruptcy Code: Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.  While you can receive a bankruptcy discharge and thus eliminate your debts by filing either chapter, Chapter 7 and Chapter 13 function very differently.   

Types of Bankruptcy: Chapter 7

Chapter 7 is intended for those looking for a fresh start. It’s often referred to as “liquidation” bankruptcy -- meaning that you must be prepared to give up any assets that you can’t protect by your jurisdiction’s bankruptcy exemptions to get a clean slate of your debts.  Below is a checklist of needed information for Chapter 7. For more detailed information on any of the checklist items, please click the highlighted links.

  • Must file an accurately completed Chapter 7 Bankruptcy Petition with your jurisdiction’s Bankruptcy Court
  • Must pay Court’s Chapter 7 Filing Fee : $299
  • Must complete Credit Counseling with an approved agency (For a list of all approved agencies in your state, see www.usdoj.gov/ust and select "Credit Counseling and Debtor Education.")
  • Case is administered by an assigned Bankruptcy Trustee. Must attend a Trustee supervised Meeting of the Creditors about a month after your case is filed.
  • Typically takes 4-6 months from time of filing to complete and receive a discharge
  • Student Loans, parking tickets and debts ordered to be paid via a divorce decree are NON-dischargeable (can’t be eliminated in a Chapter 7)
  • Can only successfully file Chapter 7 ONCE EVERY 8 YEARS
  • Bankruptcy Attorney Fees:  Usually $500 - $2500 (or higher if your case is highly complex) depending on where you live.
  • Must meet income requirements and pass the Bankruptcy Court’s Means Test to qualify for Chapter 7.  Those who don’t qualify based on income must file Chapter 13.

Types of Bankruptcy: Chapter 13

Chapter 13 is commonly referred to as the “reorganization” bankruptcy.  It’s filed for many reasons - most commonly to save a home from foreclosure, stop IRS collection or to consolidate debts into a single monthly affordable payment.  Below is a checklist of needed information for Chapter 13. For more detailed information on any of the checklist items, please click the highlighted links.

  • Must file an accurately completed Chapter 13 Bankruptcy Petition and Chapter 13 Plan with your jurisdiction’s Bankruptcy Court
  • Must pay Court’s Chapter 13 Filing Fee : $274
  • Must complete Credit Counseling with an approved agency (For a list of all approved agencies in your state, see www.usdoj.gov/ust and select "Credit Counseling and Debtor Education.")
  • Case is administered by an assigned Bankruptcy Trustee. Must attend a Trustee supervised Meeting of the Creditors about a month after your case is filed.
  • Chapter 13 repayment plans typically must last 5 years(60 months) from time of filing to receive a discharge
  • Student Loans, parking tickets and other non-dischargeable debts can be included in the repayment plan
  • No limit of amount of times you can file Chapter 13, though most Courts discourage repetitive filings within a short period of time
  • Bankruptcy Attorney fees:  Usually $1500 - $3500 (or higher if your case is highly complex) depending on where you live.  The majority of the attorney fees are typically included in the monthly consolidated Chapter 13 payment.
  • Must meet monthly income requirements to qualify for Chapter 13. Sources of income can include: employment, social security, pensions, and child support among others.

Causes of Bankruptcies

There are many different life situations that result in people filing personal bankruptcies. Some of them are:

  • Insurmountable medical debt
  • Excess credit card use
  • Mismanagement of expenses relative to an individual's monthly income
  • And many more...
WP Solutions, Inc is a BBB Accredited Legal Information Service in Chicago, IL
WP Solutions, Inc is a BBB Accredited Legal Information Service in Chicago, IL

Free Evaluation Form

Free Legal Evaluation

 
Why are you considering bankruptcy? (select all that apply):
Estimate Total Debt:
1 of 5 steps
 
What bills do you have?
Estimate Total Monthly Expenses:
2 of 5 steps
 
What types of assets do you own?
Do you own real estate?
If Yes, are you behind in these payments?
Do you own an automobile?
If Yes, are you behind in these payments?
Do you have any additional assets worth more than $100,000?
If Yes, please describe:
3 of 5 steps
 
What types of income do you have?
Estimate Total Monthly Income:
4 of 5 steps
 
Contact Information:
First Name* :
Last* :
Home Phone* :
-
-
Work Phone:
-
-
Cell Phone:
-
-
Email* :
Zip* :
5 of 5 steps
Family Portrait