A legal procedure that allows debtors to reorganize or liquidate their debt with court protection of their assets and properties in the process. Bankruptcy protects its filers from repossession, foreclosure, and garnishment while wiping filers’ financial slates clean.
Someone who is owed money. It is usually someone who lends you money, but you may also owe for debts like child support and taxes.
Someone who owes money to creditors.
Chapter 7 Bankruptcy
A liquidation of unsecured nonpriority debts. Examples of such debts are credit cards, medical bills, personal loans, past-due bills (for canceled services), and payday loans. There are strict income requirements to qualify for Chapter 7 Bankruptcy. You must make less than the median income level for your state, or pass the Means Test.
Chapter 13 Bankruptcy
A debt reorganization and repayment plan. Your plan will be 3-5 years long, depending on where you fall on your state’s median income level. Remaining debts at the end of the plan are discharged.
A court-appointed attorney who will serve as a referee in your bankruptcy case. They will analyze your petition and accompanying documents to make sure everything you have presented is truthful. If any of your assets are non-exempt or you made any preferential payments, they will force collection and contribute the excess to your bankruptcy estate. In a Chapter 13, your plan payments will be made to the trustee.
341 Meeting of Creditors
This is a mandatory hearing for both Chapter 7 and Chapter 13 bankruptcy filers. Your creditors will have the option to attend this hearing to ask questions about your bankruptcy and object to their debts being included.
When a bankruptcy case is discharged, this means it has successfully been completed. A Chapter 7 Bankruptcy is eligible for discharge 60 days after the 341 Meeting of Creditors, or typically 3-5 months from the date of filing. A Chapter 13 won’t be discharged until the payment plan Is completed, or 3-5 years from the filing date.
This is the alternative method bankruptcy filers can use to qualify for Chapter 7 if their income is above their state’s median level for their family size. Mandatory expenses will be deducted from the average of your last six months’ income to determine if you have enough disposable income to pay your debts.