Many people view bankruptcy as a last resort when it comes to taking control of their financial debts. Despite the value that many people place on the bankruptcy process, most individuals do not know very much about what the bankruptcy process involves. The following will take a brief look at the difference between what happens after a person files for Chapter 7, 11, or 13 bankruptcy.
After filing for bankruptcy, you will enjoy the protection of an automatic stay. This means that a block will be placed on your outstanding debt to prevent creditors from collecting. While the stay is in place, creditors will be prohibited from garnishing your wages as well as deducting money from your bank account or going after any secured assets.
After filing for bankruptcy, you will likely be required to take one or several classes. The government requires individuals to take credit counseling 180 days before they file for bankruptcy. You will also be required to take a debt education course if you would like to have your debts ultimately discharged.
Several weeks after filing for bankruptcy, you will be required to attend a creditors meeting, which is a court meeting between you, your bankruptcy trustee, and any creditors who would like to attend. During this meeting, you can expect to be asked questions about your financial situation as well as your decision to file for bankruptcy.
Chapter 7: Asset Liquidation
Chapter 7 debtors are exempted from liquidating their property if it is primarily exempt or if the cost makes liquidation not worth it. In these situations, the property is abandoned by the bankruptcy trustee and a person is allowed to keep it.
Consequently, few debtors end up having to not surrender any property. After a creditor meeting, your trustee will decide whether or not to liquidate your property.
Chapter 11: Best Interests Test
After filing for Chapter 11, a company will create a reorganization plan. While companies are permitted to operate as usual, they must make significant financial decisions. Creditors as well as shareholders are allowed to express their opinion about how the company should reorganize.
Reorganization plans are also required to pass a “best interests” test, which makes sure that creditors receive as much money under the reorganization plan as they would have if the debtor had filed for Chapter 7 instead.
Chapter 13: Payment Plan
With Chapter 13 bankruptcy, your are able to make a plan to pay off your debts. “Priority debts” are debts that will be paid off in full and include alimony, child support, and a number of other types of debt. What exactly your payment plan looks like will be determined by numerous factors including what you owe and what your income looks like.
Speak with an Experienced Bankruptcy Attorney
The bankruptcy process can seem overwhelming, but an experienced bankruptcy attorney can help you navigate it successfully. Contact the Adam Law Group today to obtain the assistance of an experienced bankruptcy attorney.