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Bankruptcy is a legal procedure which allows someone to either reduce or eliminate their worrisome debts. The U.S. Bankruptcy Code in Title 11 outlines and details requirements, statutes and courts that make a bankruptcy case operate smoothly.
The main difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is the latter's agreement of reorganizing debt instead of eliminating it. In Chapter 7 bankruptcy, all debts must be cleared. Creditors allow a Chapter 7 bankruptcy to be a volunteered procedure, but it's usually forced. Chapter 13 bankruptcy is always voluntary. Every eight years, a Chapter 7 bankruptcy can be filed, contrasting Chapter 13's two-year wait.
Chapter 7 bankruptcy obliges creditors to seek liquidation of non-exempt assets. A regent of the bankruptcy court takes possession of these assets and sells them; the money gained from the assets sold is used to help free the debtor from his or her debt. After this, the debtor is free of obligations to the creditor.
Not all debts are discharged in Chapter 7 bankruptcy, however. Financial obligations such as alimony, child support, taxation and student loans cannot be discharged. Likewise, any debts that were deliberately not mentioned will refrain from being exempt of dismissal.
For Chapter 7 bankruptcy, liquid assets are targeted instead of other things of material value. Liquid assets are what someone would survive on if they lost employment suddenly. The usual list of liquid assets include cash money, funds in a bank account (checking or savings), mutual funds, stocks and bonds. Illiquid assets take a great length of time to be converted into money, which is why creditors shy away from claiming these in a Chapter 7 bankruptcy. Electronics, furniture, jewelry, pricey clothes and real estate are all examples of illiquid assets.
The consequences for filing bankruptcy is steep, starting with the length of time it lasts on a person's credit report: 10 years. That's an entire decade of a person's credit looking risky and intimidating to potential lenders. Investing will also be a lot tougher after a Chapter 7 bankruptcy, but it's not an impossible goal. As with all bankruptcies, credit score is severely reduced.
Bankruptcy is not all doom and gloom, though. As stated previously, some assets (liquid or illiquid) are exempt from being taken into custody. The most commonly exempt assets are:
- Health insurance plans. An IRA account with less than one million dollars. Motored vehicles up to a certain value. Household appliances. Rewards from personal injury lawsuits. Necessary clothes, footwear and home furnishings. Inexpensive trade tools.
Further inquiry on exemptions can be determined by what state the debtor lives in. Not all states have the exact same laws on Chapter 7 bankruptcy exemptions.
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If you filed a chapter 13 and it was discharged about 1 year ago can you file a chapter 7 now?
You can indeed file a chapter seven. However, new bankruptcy reforms will go into effect in October, and it will be much more difficult to file a chapter seven, total liquidation BK.
What Are Chapter 13 Bankruptcy Exemptions?
Although most debtors keep all their property after filing a Chapter 13 bankruptcy, debtors must file exemptions when applying for this type of bankruptcy just like they do when they file for Chapter 7 bankruptcy. Filing exemptions in a Chapter 13 bankruptcy is for the benefit of creditors rather than the debtor himself. The exemptions inform the creditor of how much she is entitled to and allows her to compare the settlement of the case with the settlement the creditor would receive if the debtor filed Chapter 7 bankruptcy instead.Best Interest of Creditors TestU.S. bankruptcy law requires Chapter 13 bankruptcy applications to pass the "best interest of creditors test." Creditors involved in a Chapter 13 bankruptcy must receive at least as much from the bankruptcy as they would if the debtor filed Chapter 7 bankruptcy instead. The bankruptcy trustee performs this test by deducting the debtor's exemptions from the full value of the estate to determine how much the estate would be worth if the debtor filed Chapter 7 bankruptcy. Creditors may receive more from Chapter 13 than they would from Chapter 7, but they may not receive less from Chapter 13.Determining Payment AmountChapter 13 exemptions, or more specifically, the best interest of creditors test, are also used to determine how much the debtor must pay over the lifetime of the plan. To make this determination, the bankruptcy trustee compares three numbers. The best interest of creditors test, or the non-exempt value of the estate minus administrative costs, is one of these three numbers. The total amount of priority claims, such as alimony, child support and back taxes owed, is another number the bankruptcy trustee looks at, as is the debtor's disposable income, or income after payroll taxes each pay period. The bankruptcy trustee takes the biggest of these numbers and divides it by the life of the plan to determine how much the debtor must pay each month.ConsiderationsChapter 13 bankruptcy may be attractive to some debtors because debtors are at low risk of losing their property through this arrangement and there are no income limitations on this type of bankruptcy. However, debtors cant file for Chapter 13 bankruptcy if they have such large exemptions that the bankruptcy will fail the best interest of creditors test. In addition, Chapter 13 bankruptcy negatively affects the debtor's credit for seven years and requires debtors to pay the bankruptcy trustee on a monthly basis.
How is it determined if you file chapter 7 or chp 13 bankruptcy - is it a ratio?
A Chapter seven is a total liquidation bankruptcy, which means the person will have to forfeit all nonexempt property. A chapter 13 is a consolidation bankruptcy, the person keeps all of their property and pays a specified amount to the BK trustee who distributes it to creditors. The time frame for repayment under a chapter 13 is 3-5 years. With new bankruptcy reform more people will be required to file a 13 if they can pay even a small part of the debt(s). The type of filing that can be used now depends mostly on the financial status of the person, rather than which one to choose.
How do you remove a dismissed chapter thirteen bankruptcy from a credit report?
You can't. A valid entry for a dismissed chapter 13 bankruptcy will remain on a credit report for seven years from the date of dismissal.
If you file a chapter seven can you still get a passport?
You cannot be denied a passport for filing bankruptcy.
How long does a chapter 13 conversion to a chapter 7 stay on your credit report in Wisconsin?
A chapter 7 bankruptcy filing remains on your credit report for 10 years. Chapter 13 bankruptcy remains for seven years. Under chapter 13 bankruptcy you repay at least a portion of the debt, so it is removed a little sooner.
Why did the attorney tell us it would be seven years for a Chapter 7 bankruptcy?
By law, a person (or couple) can only declare bankruptcy every seven years. If you go through with a Chapter 7 bankrupcy, it will take 7 years for it to rotate off of your credit history.
If a chapter 7 bankruptcy was voluntarily dismissed not discharged can it be removed from your credit file?
No, it will remain for seven years.
After seven years can your chapter thirteen bankruptcy be seen on your credit report by creditors?
Yes. For at least 10 years.
How long does it take for the accounts to come off your credit report after being discharged from bankruptcy chapter seven?
Never
Can I remove bankruptcies from my credit report?
Not really. Chapter 13 bankruptcy stays on the credit report for seven (7) years (can be ten, but usually seven) and Chapter 7 bankruptcy stays on the credit report for ten (10) years. Once the term is over, you may dispute the bankruptcy with the credit bureau, however, there are no ways to remove the bankruptcy until the term is complete.
How many times can you file bankruptcy in New Mexico?
You can receive a chapter seven discharge once every eight years.
