Bankruptcy 101
Source of Info http://www.bankruptcyhome.com/bankruptcy101.htm
The two kinds of bankruptcy that you can file for are Chapter 7 and Chapter 13. There are various factors that would determine whether you should opt for Chapter 7 or Chapter 13. Through Chapter 7 Bankruptcy you can use liquidation, which literally means that you sell off property in order cover as much of the debt as possible, but at the same time you will have enough of the property left over in order for you to start all over again financially. On the other hand, the Chapter 13 Bankruptcy is the reorganization type of bankruptcy where the debtor is allowed three to five years over which to pay back the debts.
One should keep in mind that there are intricate details to this legal process that should be taken into consideration before decisions are made about filing for bankruptcy. Who qualifies? Which kind would apply to you? And will you be able to keep your property? There are many such questions that arise in such a situation. It would be a good idea to consult a competent bankruptcy attorney who can guide you through these complicated decisions and procedures.
Filing for bankruptcy cannot be the solution to all your financial problems though. In fact, bankruptcy cannot cover all kinds of debts. Common kinds of debts that bankruptcy does cover are credit card debts, medical bills and unsecured loans. However, debts related to child and spouse support and other tax debts cannot be covered in bankruptcy.
What Is Chapter 7 Bankruptcy
The answer to this question lies in the answer to a broader question: "What is the ultimate aim of filing for bankruptcy?"
If filing for bankruptcy is an opportunity for a debtor to emerge out of a financial crisis and start afresh, then Chapter 7 of the Bankruptcy Code is the way to achieve this end relatively faster. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore the fresh start takes place relatively faster.
How Can I Be Sure This Is The Best Way?
Also known as liquidation (converting assets into money) or a straight bankruptcy, Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This type of bankruptcy filing accounts for as much as 65% of all Consumer Banking filings.
As mentioned before, this is one of the faster ways of starting afresh, and more so if there are no objections from any of the parties involved. Ordinarily, most (if not all) debts would be discharged within months of the attorney filing a bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who collects all non-exempt property, sells the assets and distributes proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.
Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt, such as child support, most taxes and student loans that are discharged under Chapter 7 Bankruptcy.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because as per the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
Who Can File For A Chapter 7 Bankruptcy?
The reverse of this question would be more appropriate to answer. Debtors engaged in business would usually not like the prospects of liquidation and Chapter 11 might be a better option for such individuals associated with corporations and partnerships. Also, individuals with regular income if in a debt situation would be better suited to file a Chapter 13 bankruptcy.
Also, any person who has been granted a Chapter 7 discharge (or completed a Chapter 13 plan) within the last 8 years, cannot file for a Chapter 7 bankruptcy plan.
How Do I File For A Chapter 7 Bankruptcy?
Once you get down to filing for Bankruptcy you'll know exactly what we mean by repeating that our attorneys know best! Filing for bankruptcy is the fulfillment of a clearly laid of set of rules and procedures, but it is as complex as it seems simple. You need to be sure about just one thing: "Do you need to file for bankruptcy?" Once you've filled our evaluation form and got the answer to that basic question, in discussion with our attorneys give all details of your case. Be sure the information you provide is complete and correct. Once these preliminary things are taken care of, leave it to the attorneys to take your case to its logical conclusion.
Step 1: Before You Can File
At the initial consultation your Second Start attorney will give you a list of documents that you need in order to prepare your Bankruptcy Petition and schedules. Second Start will also provide you with an intake form to complete. Once the listed documents have been assembled and the intake form is completed, a second appointment with Second Start will be scheduled where the documentation and intake form is reviewed.
Step 2: Credit Counseling Commences
After the second appointment and the documents are ready, you will attend Credit Counseling and obtain a Credit Counseling certificate. While Credit Counseling is sought, Second Start will prepare your court papers. We will then have a final in-office appointment, where a Second Start attorney will completely review your bankruptcy petition and schedules with you, and you will sign your petition and schedules.
Step 3: Bankruptcy Papers are Filed
Second Start files your case with the court. Your papers are filed electronically with the Bankruptcy Court, and immediately you will receive lawful protection from harassing creditors. Immediately after filing, Second Start will provide you with your bankruptcy case number. If you continue to receive phone calls from bill collectors, you can give the creditor your case number and the Second Start telephone number. Debt collectors, after your Bankruptcy is filed, should then deal with your attorney directly. If you have creditors who are garnishing, foreclosing or repossessing property, Second Start will notify that creditor immediately a bankruptcy is filed and the debtor is protected from this kind of harassment.
Step4 Financial Management Cours
After your case is filed, you will need to attend “The Financial Management Course” approved by the United States Trustee's office — www.usdoj.gov/ust ). After completion, you will bring this certificate to your Second Start attorney for the Meeting of Creditors.
Cours Attend Meeting of Creditors
Approximately 30 days after your case is filed, Second Start will attend a hearing with you that is called a 341 Meeting of Creditors. At this meeting, a U.S. Trustee, who is appointed to your case, will interview you for approximately 5-10 minutes and ask you some basic questions about your case. This meeting is mandatory, and you must appear with proper identification (current picture identification and Social Security Card). You must also bring a copy of your most recent statements for all financial accounts and the pay stub(s) that you receive after your case is filed. The meeting is called the Meeting of Creditors because this is also an opportunity for the creditors to come and ask you questions. However, in most cases creditors do not appear.
Step 6: 60 days later
In each case, the Trustee and Creditors are given time to object to various aspects of the filer’s petition and schedules. Although objections are rare, in some cases, they do occur. All objections are due within 60 days after the Meeting of Creditors. Quality preparation of your petition, schedules, and statements will help prevent most unnecessary objections.
Step7: Receive Discharge
If no party files an objection in your case, you should receive a discharge shortly after the 60-day waiting period expires.
Step 8: Post-Discharge Asset Administration
In some cases, where non-exempt assets are turned over to the bankruptcy estate, your case may remain open until all of the assets are received and distributed.
What Is Chapter 13 Bankruptcy
When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, this process allows the debtor to use whatever income they may have in the future to pay off the creditors. Needless to say, filing Chapter 13 Bankruptcy is applicable for a debtor who does have a regular income, and thus can afford to request for such adjustments, or reductions.
The United States Bankruptcy Code gives the debtor a ceiling of 5 years, within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
How Does Chapter 13 Bankruptcy Work?
While debtors are allowed to keep all of their property, the court approves a new interest-free plan for repayment. A written plan is created giving details of all the transactions that will occur, and the duration of the same. The repayment must begin within thirty to forty-five days after the case has started. The transitory stage of paying a trustee who then pays a creditor, as in Chapter 7 Bankruptcy is usually eliminated with Chapter 13 Bankruptcy. Although, in some cases people may involve a trustee who would take care of di*****ursing money to the creditors as per the plan. Also, as per the law the creditors must strictly adhere the repayment plan approved by the court and are in fact prohibited to collect any claims from the debtor. Your attorney will prepare new repayment plan to best suit your situation.
The one advantage of Chapter 13 over Chapter 7 Bankruptcy is the full discharge option which is not applicable under Chapter 7 filing. For example, if a debtor manages to complete all necessary payments in the plan, he/she is given a full plan discharge. (There are a few exceptions to this case, which your attorney will guide you about if necessary.) Yet another advantage of the Chapter 13 filing is that a repayment can be created even if creditors disagree with it, as long as it is approved by the Court. Although, in all fairness the court allows creditors also to file an objection, in case they may have any.
Who Can File For Chapter 13 Bankruptcy?
The most important criteria for a person to be able to file for Chapter 13 bankruptcy is that the individual must have a regular income. There are a few other criterions that must be met for filing a Chapter 13 Bankruptcy, your attorney will be the best person to introduce you to these!
Debts that are not discharged in a Chapter 13*:
• Debts incurred through fraud, such as lying about your income on a credit application
• Child and spousal support
• Most taxes
• Most student loans
• Debts that you forgot to list on your bankruptcy papers
• Debts for personal injury and death caused by your driving a motor vehicle while intoxicated
• Debts you never intended to pay back (such as debts took on near in time to filing bankruptcy, a cash advance that wasn't paid back, debt taken on after meeting with a bankruptcy attorney)
• Debts for personal injury incurred through willful or malicious harm
• Criminal fines and penalties.
How Can I File For Chapter 13 Bankruptcy?
Let ’s just say our attorneys will ensure that you don’t need to bog yourself down by trying to understand the complicated details of this answer. Essentially, the filing for Chapter 13 Bankruptcy entails the following.
• Determine whether Chapter 13 is the best solution for you.
• Prepare a budget.
• Examine individual cases to figure out whether require filing of Chapter 13 bankruptcy, or can be tackled in some other way.
• Determine and implement methods of dealing with secured creditors.
• Devise a chapter 13 plan, and fill out the forms.
• Pay the filing fee and complete the process of filing the forms and pleadings.
• Attend whatever meetings you maybe required to attend; with the creditors, court hearings etc.
• Obtain a discharge once the payments have all been made, and the plan terminated.
Bullet points have a habit of making things look neat, orderly and simple. Much like our efficient attorneys who will straighten out the crumples in the process of filing for bankruptcy. There’s a lot that lies between the lines, and it goes without saying that attorneys will take care of these things. All you have to do is fill out that evaluation form that will tell you whether you need to file for bankruptcy in the first place. Thereafter, our Sponsored lawyer on the other side of that phone call will handle, and solve your financial crisis.
There are specific and complex procedures involved in filing a Chapter 13 plan. First, your lawyer will need to prepare a detailed financial summary of what and whom you owe, what your assets are, your monthly living expenses, and income. Your attorney must also prepare a comprehensive proposal for repayment. Often a plan will call for different percentages of repayment for different classes of creditors. All of the items submitted must be prepared on court-approved forms.
Once you file your petition and plan the court will issue an Automatic Stay (an order, barring all creditors from taking any further collections or legal action against you, including foreclosure or garnishment of your wages). The court will then set a date for a hearing which is called the Meeting of Creditors. You and your creditors will be notified of the time, date, and place of this meeting. You will be required to attend this hearing with your attorney and answer questions under oath about your financial matters.
The trustee appointed to your case will run the meeting. It is the trustee's job to verify the financial information you provide — and the meeting may include questions about your income, expenses, property, past earnings, and the schedule of repayment. The trustee will then decide whether he can recommend to the judge that your plan be confirmed.
The court will also notify you of the date for the confirmation hearing. At this hearing, the judge will determine whether your plan should be confirmed and allowed to proceed. The creditors may attend in order to offer any objections they may have. Your presence at the confirmation hearing is often not required. Once your plan is confirmed, you will simply make one payment a month to the trustee who will then make payments to your creditors according to the schedule set out in the approved plan. You will start living your life again.
What Congress and the Supreme Court Say about Bankruptcy
Congress drafted bankruptcy legislation towards relieving the hardworking individual from severe indebtedness and permitting such an individual to start a new life. When enacting the current bankruptcy laws Congress stated that the purpose of bankruptcy was to “permit complete settlement of the affairs of a bankrupt debtor, and a complete discharge and fresh start." (H.R.Rep. No. 95-595). Even the Supreme Court noted in Kokoszka v. Belford, “…the intent of Congress (was) to leave the (debtor) free… to accumulate new wealth in the future and thus make an unencumbered fresh start.” In Wetmore v. Markoe, the court stated “systems of bankruptcy are designed to relieve the honest debtor front eh weight of indebtedness which has become oppressive and to permit him to have a fresh start in…life, freed from the obligations and responsibilities which may have resulted from...misfortunes.” And in Grogan v. Garner “…a central purpose of the (bankruptcy) code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.” Bankruptcy gives the honest but unfortunate person a fresh start in life unhampered by the stress and weight of preexisting debt.
The two most important aspects of the fresh start are the exemption provisions and the discharge of debts. The Supreme Court stated that “exemptions were designed to permit individual debtors to retain exempt property so that they will be able to enjoy a fresh start after bankruptcy.” (U.S. v. Security Indus. Bank). Exemptions allow the debtor to retain assets needed for a fresh start and to assure that the debtor will not become impoverished. The bankruptcy discharge essentially wipes the financial slate clean and allows the debtor to start afresh.
Recommend Reading
Consumer Bankruptcy: The Complete Guide to Chapter 7 and Chapter 13 Personal Bankruptcy by Henry J. Sommer
Credit After Bankruptcy: A Step-By-Step Action Plan to Quick and Lasting Recovery after Personal Bankruptcy by Stephen Snyder
Source of Info http://www.bankruptcyhome.com/bankruptcy101.htm
The two kinds of bankruptcy that you can file for are Chapter 7 and Chapter 13. There are various factors that would determine whether you should opt for Chapter 7 or Chapter 13. Through Chapter 7 Bankruptcy you can use liquidation, which literally means that you sell off property in order cover as much of the debt as possible, but at the same time you will have enough of the property left over in order for you to start all over again financially. On the other hand, the Chapter 13 Bankruptcy is the reorganization type of bankruptcy where the debtor is allowed three to five years over which to pay back the debts.
One should keep in mind that there are intricate details to this legal process that should be taken into consideration before decisions are made about filing for bankruptcy. Who qualifies? Which kind would apply to you? And will you be able to keep your property? There are many such questions that arise in such a situation. It would be a good idea to consult a competent bankruptcy attorney who can guide you through these complicated decisions and procedures.
Filing for bankruptcy cannot be the solution to all your financial problems though. In fact, bankruptcy cannot cover all kinds of debts. Common kinds of debts that bankruptcy does cover are credit card debts, medical bills and unsecured loans. However, debts related to child and spouse support and other tax debts cannot be covered in bankruptcy.
What Is Chapter 7 Bankruptcy
The answer to this question lies in the answer to a broader question: "What is the ultimate aim of filing for bankruptcy?"
If filing for bankruptcy is an opportunity for a debtor to emerge out of a financial crisis and start afresh, then Chapter 7 of the Bankruptcy Code is the way to achieve this end relatively faster. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore the fresh start takes place relatively faster.
How Can I Be Sure This Is The Best Way?
Also known as liquidation (converting assets into money) or a straight bankruptcy, Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This type of bankruptcy filing accounts for as much as 65% of all Consumer Banking filings.
As mentioned before, this is one of the faster ways of starting afresh, and more so if there are no objections from any of the parties involved. Ordinarily, most (if not all) debts would be discharged within months of the attorney filing a bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who collects all non-exempt property, sells the assets and distributes proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.
Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt, such as child support, most taxes and student loans that are discharged under Chapter 7 Bankruptcy.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because as per the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
Who Can File For A Chapter 7 Bankruptcy?
The reverse of this question would be more appropriate to answer. Debtors engaged in business would usually not like the prospects of liquidation and Chapter 11 might be a better option for such individuals associated with corporations and partnerships. Also, individuals with regular income if in a debt situation would be better suited to file a Chapter 13 bankruptcy.
Also, any person who has been granted a Chapter 7 discharge (or completed a Chapter 13 plan) within the last 8 years, cannot file for a Chapter 7 bankruptcy plan.
How Do I File For A Chapter 7 Bankruptcy?
Once you get down to filing for Bankruptcy you'll know exactly what we mean by repeating that our attorneys know best! Filing for bankruptcy is the fulfillment of a clearly laid of set of rules and procedures, but it is as complex as it seems simple. You need to be sure about just one thing: "Do you need to file for bankruptcy?" Once you've filled our evaluation form and got the answer to that basic question, in discussion with our attorneys give all details of your case. Be sure the information you provide is complete and correct. Once these preliminary things are taken care of, leave it to the attorneys to take your case to its logical conclusion.
Step 1: Before You Can File
At the initial consultation your Second Start attorney will give you a list of documents that you need in order to prepare your Bankruptcy Petition and schedules. Second Start will also provide you with an intake form to complete. Once the listed documents have been assembled and the intake form is completed, a second appointment with Second Start will be scheduled where the documentation and intake form is reviewed.
Step 2: Credit Counseling Commences
After the second appointment and the documents are ready, you will attend Credit Counseling and obtain a Credit Counseling certificate. While Credit Counseling is sought, Second Start will prepare your court papers. We will then have a final in-office appointment, where a Second Start attorney will completely review your bankruptcy petition and schedules with you, and you will sign your petition and schedules.
Step 3: Bankruptcy Papers are Filed
Second Start files your case with the court. Your papers are filed electronically with the Bankruptcy Court, and immediately you will receive lawful protection from harassing creditors. Immediately after filing, Second Start will provide you with your bankruptcy case number. If you continue to receive phone calls from bill collectors, you can give the creditor your case number and the Second Start telephone number. Debt collectors, after your Bankruptcy is filed, should then deal with your attorney directly. If you have creditors who are garnishing, foreclosing or repossessing property, Second Start will notify that creditor immediately a bankruptcy is filed and the debtor is protected from this kind of harassment.
Step4 Financial Management Cours
After your case is filed, you will need to attend “The Financial Management Course” approved by the United States Trustee's office — www.usdoj.gov/ust ). After completion, you will bring this certificate to your Second Start attorney for the Meeting of Creditors.
Cours Attend Meeting of Creditors
Approximately 30 days after your case is filed, Second Start will attend a hearing with you that is called a 341 Meeting of Creditors. At this meeting, a U.S. Trustee, who is appointed to your case, will interview you for approximately 5-10 minutes and ask you some basic questions about your case. This meeting is mandatory, and you must appear with proper identification (current picture identification and Social Security Card). You must also bring a copy of your most recent statements for all financial accounts and the pay stub(s) that you receive after your case is filed. The meeting is called the Meeting of Creditors because this is also an opportunity for the creditors to come and ask you questions. However, in most cases creditors do not appear.
Step 6: 60 days later
In each case, the Trustee and Creditors are given time to object to various aspects of the filer’s petition and schedules. Although objections are rare, in some cases, they do occur. All objections are due within 60 days after the Meeting of Creditors. Quality preparation of your petition, schedules, and statements will help prevent most unnecessary objections.
Step7: Receive Discharge
If no party files an objection in your case, you should receive a discharge shortly after the 60-day waiting period expires.
Step 8: Post-Discharge Asset Administration
In some cases, where non-exempt assets are turned over to the bankruptcy estate, your case may remain open until all of the assets are received and distributed.
What Is Chapter 13 Bankruptcy
When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, this process allows the debtor to use whatever income they may have in the future to pay off the creditors. Needless to say, filing Chapter 13 Bankruptcy is applicable for a debtor who does have a regular income, and thus can afford to request for such adjustments, or reductions.
The United States Bankruptcy Code gives the debtor a ceiling of 5 years, within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
How Does Chapter 13 Bankruptcy Work?
While debtors are allowed to keep all of their property, the court approves a new interest-free plan for repayment. A written plan is created giving details of all the transactions that will occur, and the duration of the same. The repayment must begin within thirty to forty-five days after the case has started. The transitory stage of paying a trustee who then pays a creditor, as in Chapter 7 Bankruptcy is usually eliminated with Chapter 13 Bankruptcy. Although, in some cases people may involve a trustee who would take care of di*****ursing money to the creditors as per the plan. Also, as per the law the creditors must strictly adhere the repayment plan approved by the court and are in fact prohibited to collect any claims from the debtor. Your attorney will prepare new repayment plan to best suit your situation.
The one advantage of Chapter 13 over Chapter 7 Bankruptcy is the full discharge option which is not applicable under Chapter 7 filing. For example, if a debtor manages to complete all necessary payments in the plan, he/she is given a full plan discharge. (There are a few exceptions to this case, which your attorney will guide you about if necessary.) Yet another advantage of the Chapter 13 filing is that a repayment can be created even if creditors disagree with it, as long as it is approved by the Court. Although, in all fairness the court allows creditors also to file an objection, in case they may have any.
Who Can File For Chapter 13 Bankruptcy?
The most important criteria for a person to be able to file for Chapter 13 bankruptcy is that the individual must have a regular income. There are a few other criterions that must be met for filing a Chapter 13 Bankruptcy, your attorney will be the best person to introduce you to these!
Debts that are not discharged in a Chapter 13*:
• Debts incurred through fraud, such as lying about your income on a credit application
• Child and spousal support
• Most taxes
• Most student loans
• Debts that you forgot to list on your bankruptcy papers
• Debts for personal injury and death caused by your driving a motor vehicle while intoxicated
• Debts you never intended to pay back (such as debts took on near in time to filing bankruptcy, a cash advance that wasn't paid back, debt taken on after meeting with a bankruptcy attorney)
• Debts for personal injury incurred through willful or malicious harm
• Criminal fines and penalties.
How Can I File For Chapter 13 Bankruptcy?
Let ’s just say our attorneys will ensure that you don’t need to bog yourself down by trying to understand the complicated details of this answer. Essentially, the filing for Chapter 13 Bankruptcy entails the following.
• Determine whether Chapter 13 is the best solution for you.
• Prepare a budget.
• Examine individual cases to figure out whether require filing of Chapter 13 bankruptcy, or can be tackled in some other way.
• Determine and implement methods of dealing with secured creditors.
• Devise a chapter 13 plan, and fill out the forms.
• Pay the filing fee and complete the process of filing the forms and pleadings.
• Attend whatever meetings you maybe required to attend; with the creditors, court hearings etc.
• Obtain a discharge once the payments have all been made, and the plan terminated.
Bullet points have a habit of making things look neat, orderly and simple. Much like our efficient attorneys who will straighten out the crumples in the process of filing for bankruptcy. There’s a lot that lies between the lines, and it goes without saying that attorneys will take care of these things. All you have to do is fill out that evaluation form that will tell you whether you need to file for bankruptcy in the first place. Thereafter, our Sponsored lawyer on the other side of that phone call will handle, and solve your financial crisis.
There are specific and complex procedures involved in filing a Chapter 13 plan. First, your lawyer will need to prepare a detailed financial summary of what and whom you owe, what your assets are, your monthly living expenses, and income. Your attorney must also prepare a comprehensive proposal for repayment. Often a plan will call for different percentages of repayment for different classes of creditors. All of the items submitted must be prepared on court-approved forms.
Once you file your petition and plan the court will issue an Automatic Stay (an order, barring all creditors from taking any further collections or legal action against you, including foreclosure or garnishment of your wages). The court will then set a date for a hearing which is called the Meeting of Creditors. You and your creditors will be notified of the time, date, and place of this meeting. You will be required to attend this hearing with your attorney and answer questions under oath about your financial matters.
The trustee appointed to your case will run the meeting. It is the trustee's job to verify the financial information you provide — and the meeting may include questions about your income, expenses, property, past earnings, and the schedule of repayment. The trustee will then decide whether he can recommend to the judge that your plan be confirmed.
The court will also notify you of the date for the confirmation hearing. At this hearing, the judge will determine whether your plan should be confirmed and allowed to proceed. The creditors may attend in order to offer any objections they may have. Your presence at the confirmation hearing is often not required. Once your plan is confirmed, you will simply make one payment a month to the trustee who will then make payments to your creditors according to the schedule set out in the approved plan. You will start living your life again.
What Congress and the Supreme Court Say about Bankruptcy
Congress drafted bankruptcy legislation towards relieving the hardworking individual from severe indebtedness and permitting such an individual to start a new life. When enacting the current bankruptcy laws Congress stated that the purpose of bankruptcy was to “permit complete settlement of the affairs of a bankrupt debtor, and a complete discharge and fresh start." (H.R.Rep. No. 95-595). Even the Supreme Court noted in Kokoszka v. Belford, “…the intent of Congress (was) to leave the (debtor) free… to accumulate new wealth in the future and thus make an unencumbered fresh start.” In Wetmore v. Markoe, the court stated “systems of bankruptcy are designed to relieve the honest debtor front eh weight of indebtedness which has become oppressive and to permit him to have a fresh start in…life, freed from the obligations and responsibilities which may have resulted from...misfortunes.” And in Grogan v. Garner “…a central purpose of the (bankruptcy) code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.” Bankruptcy gives the honest but unfortunate person a fresh start in life unhampered by the stress and weight of preexisting debt.
The two most important aspects of the fresh start are the exemption provisions and the discharge of debts. The Supreme Court stated that “exemptions were designed to permit individual debtors to retain exempt property so that they will be able to enjoy a fresh start after bankruptcy.” (U.S. v. Security Indus. Bank). Exemptions allow the debtor to retain assets needed for a fresh start and to assure that the debtor will not become impoverished. The bankruptcy discharge essentially wipes the financial slate clean and allows the debtor to start afresh.
Recommend Reading
Consumer Bankruptcy: The Complete Guide to Chapter 7 and Chapter 13 Personal Bankruptcy by Henry J. Sommer
Credit After Bankruptcy: A Step-By-Step Action Plan to Quick and Lasting Recovery after Personal Bankruptcy by Stephen Snyder
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