Archive for category: Uncategorized

Bankruptcy is a legal process that helps individuals or businesses eliminate or repay their debts. In some cases, however, bankruptcy may be dismissed. A dismissal can happen for several reasons, such as if the debtor does not follow the rules of the bankruptcy process or if the debtor’s creditors object to the discharge of the debt.

The FCRA was created to protect consumers’ rights. This law also requires credit agencies to ensure the information they have about you is correct. The regulation says what information should be in consumer reports. It also says that if people think this information is wrong, they can ask to have it changed.

What is the FCRA?

The Fair Credit Reporting Act (FCRA) is a federal law that sets rules for obtaining and viewing credit reports. It was passed in 1970 to assure the fairness, accuracy, and privacy of personal information stored by the credit reporting agencies files.

The Fair Credit Reporting Act is a law that sets rules for how credit information about consumers can be collected, kept, and shared. This includes managing how long information can be kept and how it can be shared with consumers.

What does FCRA mean on a credit report?

The Fair Credit Reporting Act (FCRA) is a federal law that promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The FCRA regulates how these agencies collect, use, and share consumer credit information.

When bankruptcy is dismissed, the debtor will still be responsible for repaying their debts. In some cases, the dismissal may be reported to the credit reporting agencies, which could impact the debtor’s credit score.

If you’re considering filing for bankruptcy, it’s important to understand the process and the potential consequences, including a dismissal. An experienced bankruptcy attorney can help you navigate the process and protect your rights.

Who is covered under FCRA?

Consumer reporting agencies must follow the stipulations of the FCRA. A consumer reporting agency collects and sells information about you to third parties.

The most well-known consumer reporting agencies in the United States are:

• Equifax
• Experian
• TransUnion

The FCRA guarantees that you are informed if information in your credit file is used against you to prevent you from obtaining credit, getting a job, or collecting insurance benefits.

You are allowed by the FCRA to request all the information a credit reporting agency has on you. This is called a “file disclosure.”

What is an FCRA adverse action letter?

An adverse action letter is a notice that informs you that your credit application, job application, insurance application, or other applications for benefits have been rejected due to information in a credit report.

It should state which credit reporting agency was used and how to contact them.

You have the right to know why you were denied based on information in your credit report. You also have the right to get a free copy of your credit report from the credit reporting agency if the denial was due to information in your credit report.

What is FCRA disclosure?

The disclosure is the first stage in performing an FCRA-compliant background check, and it is the process of notifying an applicant about the intent to conduct a background check on them.

A clear statement that a background check will be utilized to influence an employment choice is required.

The name of the vendor must be stated if the recruiting business is outsourcing the evaluation to a third party, such as a Consumer Reporting Agency (CRA).

The Fair Credit Reporting Act (FCRA) is a federal statute that requires you to inform prospective employees or applicants that their credit reports will be obtained by a credit reporting agency. This is so they can inform their prospective employers ahead of time if there are any issues with their credit, allowing them to address them before being hired.

What does it mean when it says “FCRA requirements”?    

After an inquiry has been conducted, credit agencies can add a note to the account stating it was disputed, as well as “FCRA requirements” at the end of the statement.

Why? If a consumer disputes information on their credit report and the credit bureaus find that it is correct, a statement claiming that the account “meets FCRA requirements” may be added.

It can also be inferred that all data is correct and in compliance with federal rules.

What are your rights under the FCRA?

First, you have the right to be told if someone has used your credit report to deny you credit, insurance, or a job. If this happens, the person who denied you must tell you the name, address, and phone number of the agency that provided the information.

Second, you have the right to know what is in your file. You have the right to access and obtain all of the information about you in a consumer reporting agency’s files.

Third, you are entitled to a free file disclosure if you have been the target of adverse action due to material in your credit report.

If you were a victim of identity theft, placed a fraud alert in your file, have incorrect information as a result of fraud, are on public assistance and expect to apply for work within 60 days, or if you’re currently unemployed but plan to seek employment in the next six months you can also have a free file disclosure.

Fourth, you have the right to obtain a credit score, a numerical summary of your creditworthiness based on data supplied by credit bureaus.

Last but not least, you have a legal right to challenge incorrect or incomplete information.

You should also be aware that only those with a genuine need have access to your file. Employers will be informed of your records only if you give consent.

Who enforces the FCRA?

Since the moment the legislation was approved, the FTC has had exclusive enforcement power under the FCRA. The Federal Trade Commission is an agency of the United States government that helps people by enforcing antitrust laws and promoting consumer protection.

The FTC is the federal government’s only consumer protection and competition agency in a number of sectors. The FTC pursues effective and aggressive law enforcement, as well as consumers’ interests. 

FAQ

Can you remove dismissed bankruptcies from your credit report? 

The answer is no. You will not be able to remove a bankruptcy from your credit report. It will be removed automatically after seven or 10 years, depending on the kind of bankruptcy you filed.

Can credit repair companies remove bankruptcies?

Not necessarily. There is no such thing as a “quick fix” for credit problems. Credit repair businesses can dispute negative items on your credit reports to fix them. Many, though, are fraudulent and disappear when you pay them.

Remember that you can take similar actions as a credit repair firm for free or with the help of a bankruptcy lawyer. Obtaining copies of your credit reports from the three national credit bureaus Equifax, Experian, and TransUnion is a wonderful first step.

How much will the credit score increase after Chapter 7 falls off?

If you have a Chapter 7 bankruptcy fall off your credit report, you can expect your credit score to go up by around 50-150 points after two to three months. Then it generally hovers around 500 to 550 for the typical debtor.

Technically, you are allowed to gamble while in Chapter 7 bankruptcy. However, there are a few things that you need to keep in mind if you do choose to gamble while amid your bankruptcy case.

First and foremost, any money that you win while gambling will become part of your bankruptcy estate. This means that your creditors will be able to take a portion of your winnings to pay off your debts.

Additionally, if you have a gambling addiction, it is important to get help for this before you file for bankruptcy. This is because gambling can lead to even more debt, which can make it more difficult to get a discharge in your bankruptcy case.

How good is gambling for your wallet?

The gambling industry claims that the gambling business is a socially beneficial one with both economic and non-economic benefits. It is claimed that gambling creates wealth through job creation, consumer spending, and increased tax revenue. However, the economics of gambling are debatable.

The correlation between gaming and gambling debts to bankruptcy filings is unclear. Some studies claim that gambling is either a major reason or a contributing factor in bankruptcy filings. It also says that 10% to 26% of problem gamblers file for bankruptcy.

Regulations on gambling

Gambling is not mentioned in the US Constitution, and therefore it does not fall under federal jurisdiction. The 10th Amendment reserves the right to regulate gambling in the states.

Congress has enforced the Interstate Commerce Law to limit both interstate and international gambling.

Each state has the authority to prohibit or legalize the practice within its boundaries. Almost every state, if lotteries are run by the government, can be considered to allow some degree of gambling.

Gambling and bankruptcy

The goal of bankruptcy is to separate the innocent but unfortunate debtors from those who have committed various types of culpable actions.  This is accomplished by forgiving the debts of the former and holding the latter accountable through different types of bankruptcies.

If the debtor has lottery tickets or other similar gambling property, they must be reported. Gambling winnings that were acquired at the time of filing are a part of the estate’s assets and must be disclosed.

Difference between non-gambling debt and gambling debt

Unsecured debt, such as gambling debts, is unsecured and should be written off completely in a chapter 7 bankruptcy and placed behind secured debts in a chapter 13 repayment.

Sometimes, creditors may fight back and protest the debt being forgiven.

Gambling debts are frequently defined as unsecured debt since they are not secured by any property. This makes them comparable to credit cards or medical expenses. As a result, gaming debt is typically dischargeable in bankruptcy.

However, there are some exceptions to this rule. If you incurred your gambling debt while you were intoxicated or if you gambled intending to incur debt, then your gambling debt may not be discharged in bankruptcy.

Gambling addiction

Additionally, if you have a gambling addiction, you may want to consider getting help for this before you file for bankruptcy. This is because gambling can lead to even more debt, which can make it more difficult to get a discharge in your bankruptcy case.

Are gambling debts dischargeable in bankruptcy?

It wasn’t long ago that bankruptcy courts routinely rejected gambling debts as non-dischargeable. However, more recently, and perhaps as a result of the increase in permitted gambling in many states, the courts have begun allowing debt discharge.

Gambling debts are dischargeable in bankruptcy, just like other types of unsecured debts such as credit cards and personal loans. Certain gambling debts, on the other hand, may be exempt from discharge under certain circumstances.

In conclusion, gambling is not illegal while in Chapter 7 bankruptcy, but there are some things that you need to keep in mind if you do choose to gamble. Any money that you win while gambling will become part of your bankruptcy estate and your creditors will be able to take a portion of your winnings to pay off your debts. Additionally, if you have a gambling addiction, it is important to get help for this before you file for bankruptcy.

FAQ

Can I get charged with fraud for declaring bankruptcy due to gambling debt?

A creditor may challenge your bankruptcy filing if they believe that you incurred your debt under pretenses or by fraud. Gambling is viewed as fraudulent for debtors if they intend to use it to avoid creditors from getting money. When a debtor gambles during bankruptcy, all of his or her debts become non-dischargeable. As a result, the debtor will be required to pay off all of his or her post-bankruptcy obligations, not just gaming debts.

Do I have to report my gambling debts or wins?

All winnings from lotteries, raffles, horse races, casinos, and other forms of gaming are taxable. Non-cash awards such as automobiles or holidays are valued at their market value.

Gambling losses are also tax-deductible to the extent of your winnings, but they must be declared as taxable income on your tax return. Gambling profits are completely taxed and must be shown on your income tax return.

Who can help me understand bankruptcy and gambling?

If you have any questions about gambling while in Chapter 7 bankruptcy, be sure to speak with your bankruptcy attorney. They can give you specific guidance on how to handle this issue in your particular case.

The answer to this question is generally no. When you have a lot of debt (from credit cards, personal loans, medical bills, or a car loan), expect to receive more calls from creditors than you’d like. It isn’t very pleasant to feel like your phone has been taken over and you’d want the calls to stop.

Unfortunately, informing your creditors that you want to file for bankruptcy is unlikely to work. They can continue to reach out to you. One of the benefits of simply retaining a bankruptcy attorney is that your creditors will now be required to contact your attorney and by law must stop contacting you or face possible court sanctions.

You are not required to notify your creditors that you are planning to file bankruptcy; in fact, it may be in your best interest not to do so. However, there are a few exceptions to this rule, so it’s important to talk to an experienced bankruptcy attorney before making any decisions.

Here are some of the cons of giving creditors information about your financial situation and a possible bankruptcy process.

Potential adverse effects of notifying your creditors

No assurance threatening to file bankruptcy will deter creditors from calling you. The only surefire way to prevent this is actually to hire a bankruptcy attorney. Once you file the bankruptcy case with your attorney the “automatic stay” (i.e., the bankruptcy protection) comes into play, effectively freezing any attempts by your creditors to collect money owed.

Creditors are aware of the potential consequences of committing a violation and usually cease taking any further collection efforts. You should be careful to inform a creditor of your bankruptcy intentions because the creditor may intensify its efforts to get money out of you before it’s too late. Finally, no one knows what the creditor will do next, such as filing a lawsuit against you.

Yet beware of unfair debt collection!

The Fair Debt Collections Practices Act (FDCPA), a federal statute, prohibits debt collectors from using abusive methods to collect a debt.

Under the FDCPA once you simply retain an attorney to assist you with your debt obligations, then the creditor must only contact your attorney representative to discuss or resolve the debt. It also sets boundaries for creditors to prevent them from calling you in the middle of the night or from calling you an unreasonable amount of times.

Harassment from a debt collector is never OK. If you are scared, write to the firm and request that they cease calling you. If you ask them to stop contacting you, they are required by the FDCPA to comply.

How to stop phone calls and creditor harassment

A debt collector is limited by federal law from employing any deceptive, fraudulent, or misleading means to collect a debt. For example, misrepresentations about the debt are illegal under this legislation.

If you sue under this federal law and win, the debt collector will usually have to pay your attorney’s fees as well as damages. Of course, in this case, they can no longer contact you with any more collection calls.

Negotiate down the debt by working with the secured creditor or lender

If you owe money and manage your creditors yourself rather than employing a for-profit debt settlement firm, you may save a lot of money.

After you’ve decided to pay a debt, it’s time to figure out what you can afford. Take a good look at your finances.

Negotiating a settlement

Set a firm stance with certain creditors when you go to the bargaining table. Debt collectors and creditors are not allowed to threaten you with arrest or state that you will be arrested if you don’t pay your debt.

Be wary of the particular creditor that claims to be government contractors or subcontractors for government agencies like the IRS.

Some debtors consider that hiring a bankruptcy lawyer is a good idea for this negotiation. Since most bankruptcy attorneys know the ins and outs of the bankruptcy code and offer a free consultation, a debtor may visit them to decide if a bankruptcy attorney can be of assistance.

Advantages of settling a debt with a law firm

If you go to a free consultation with a lawyer, even before you talk about filing for bankruptcy, you can ask for assistance and discuss how to settle your debt. The main advantage of doing this is that you can get honest and accurate legal advice.

A bankruptcy attorney also might be able to get a lower settlement amount from the creditor than you could on your own because they are familiar with the law, have likely settled similar debts in the past, and creditors recognize that filing for bankruptcy is a legitimate possibility.

Working with a bankruptcy attorney provides you with protection from unlawful debt collection tactics, as well as confirmation that the calls and harassment will cease.

The attorney-client relationship has other great advantages like forming a solid strategy and providing an overview of all the options available to you.

How to hire a bankruptcy attorney for a bankruptcy filing to stop collection activities

You can find bankruptcy attorneys through online directories, word of mouth, or by contacting your state’s bar association. Once you have a list of potential candidates, set up consultations to get more information about their experience and fees.

Talk with the bankruptcy lawyer about the possibility and benefits of filing bankruptcy and what bankruptcy plans you have in mind. Yet keep open to the possibility that the attorney can suggest not going to bankruptcy court as the best solution.

Filing for bankruptcy to stop contact with a creditor

With a Chapter 7 bankruptcy filing, an automatic stay immediately goes into effect. The stay is a court order that stops all collections, including calls and letters, from the moment you file your case.

Yet bear in mind that according to bankruptcy laws, a creditor is not allowed to contact you directly or take any action to collect a debt once you get a case number. You will be assigned a case number when your bankruptcy petition is filed in bankruptcy court.

Proceedings will not always stop creditors

Some debtors mistakenly believe that simply informing the lender that a claim will be filed is enough to deter them from pursuing collection efforts.

Bankruptcy proceedings will not necessarily stop creditors from taking legal action against you. In some cases, your creditors may request that the court allow them to “lift the automatic stay.” If this happens, your creditors will be able to continue with any legal action that was already underway against you before you filed for bankruptcy.

Collection agencies will not care about bankruptcy protection until you get your case number and your creditor will probably continue to call you until they receive notice of your bankruptcy number.

The best method to notify your creditors you file bankruptcy

The Bankruptcy Court informs your creditors about your bankruptcy case once it is filed.  Bankruptcy cases are filed through an electronic filing system called ECF or pacer.  

This allows cases to be filed from anywhere at any time of day. The most common method for debt collectors to learn about bankruptcy filing is through a letter from the United States Bankruptcy Court Clerk.

The law requires that creditors on your bankruptcy schedules are notified of the filing. The B-9A is a type of letter in which all sorts of intricate information about the filing may be found.

What is a B-9A letter?

This letter includes:

• Debtor’s name
• Address
• Social Security number
• Client’s attorneys
• Location and phone number of the office
• Case number
• Jurisdiction
• Trustee
• Date, time, and location of the Meeting of Creditors

A B-9A letter will be sent to all creditors listed on your bankruptcy schedules. The letter will provide information about the meeting of creditors, also known as the 341 Meeting.

All you have to do is wait for the notification from the court that your creditor has been receipt of the B-9A form.

In conclusion, remember that while an attorney can help you with your bankruptcy filing, the hiring of a law firm has no legal significance for creditors. The most important thing is that the court sends out notifications to all of your creditors about your bankruptcy case. Once they have received this notification, they are legally required to cease all collection efforts.

There are many factors to consider when deciding whether or not to file for bankruptcy as a small business. Some common reasons why businesses seek to file bankruptcy include:

• To discharge debt that the business is unable to pay
• To reorganize the business and its finances
• To sell off assets to raise money to pay creditors

If your small business is struggling to make ends meet, it may be time to consider filing for bankruptcy. Bankruptcy can be a difficult decision, but it may be the best option for your business.

What happens to a small business filing for alternative bankruptcy?

Bankruptcy is a legal procedure undertaken by businesses with significant financial problems who cannot fulfill their immediate financial obligations.

When it comes to the bankruptcy code, the objective is usually to restructure debt so that a company may recover from its situation or sell off assets and pay back debts. However, not every scenario is the same, and the prospect of creditors, stockholders, and bondholders regaining their money are determined by a variety of circumstances.

What is a small business debtor?

A “small business debtor” is a person who is engaged in commercial or business activities and has aggregate noncontingent liquidated secured and unsecured debts of less than $2,000,000 as of the filing date for the petition or the order for relief. However, this debt limit may be increased in the near future by the U.S. Congress.

It may include any affiliate or joint debtor of such person who is also a debtor under this title, and a person whose primary business is the ownership of single asset real estate.

What happens when a small business goes to bankruptcy court?

A small business going to bankruptcy court means that the company is in danger of not being able to pay its creditors. In this case, the distressed company may ask the court to either discharge (wipe out) some of its debts or reorganize its debt so it can pay them back over time.

In most situations, a Chapter 7 business bankruptcy filing will terminate the company because no method exists to protect property belonging to a separate legal entity like a limited liability company (LLC). The trustee sells the firm’s assets, pays its creditors, and shuts it down.

On the other hand, sole proprietor small business owners can only file for Chapter 13 bankruptcy protection. As a result, if your firm is a partnership, corporation, or LLC, you will not be able to proceed with its Chapter 13 case.

Sole proprietors and business bankruptcy

You can include personal and business debt in your Chapter 13 bankruptcy if you are a sole proprietor business owner, just like in a Chapter 7 bankruptcy.

If you are a sole proprietor small business owner who has money, a Chapter 13 bankruptcy might be your best alternative. You might be able to keep the company operating while paying less on nonpriority unsecured personal and business obligations such as credit card bills, utility payments, and personal loans.

The small business reorganization act

The following are some of the features of small company bankruptcy:

• shorter deadlines
• a lot of flexibility to negotiate with other creditors
• a private trustee to facilitate the bankruptcy process 

The bankruptcy case is facilitated because the debtor must file a reorganization plan for the distressed business with the court’s approval within 90 days of the filing date, and in this way, the trustee may help.

Even if the disgruntled creditors do not accept the plan, the court may still approve it under bankruptcy law.

The restructuring plan must ensure that all expected disposable income for three to five years is used to pay creditors and protect the creditors’ rights. It must be just and equitable to repay creditors equally.

The small business debtors must also submit a disclosure statement to the court that includes information on the scheme for the distressed company’s creditors to consider.

A liquidation analysis that estimates proceeds and cash flow that may be gained if the firm were liquidated must be included in the disclosure statement.

The struggling businesses must also submit some projections about their ability to make payments for the benefit of creditors as indicated in the small businesses’ reorganization plan.

Additionally, once the debtor’s scheme is confirmed, any debts that existed before the confirmation date are removed.

Which business bankruptcy is better: Chapter 7 or Chapter 11?

For a small business debtor, there are several possibilities for business bankruptcy.  The business may be reorganized under Chapter 11 Subchapter V (5), or it may be liquidated under Chapter 7.

Chapter 11 bankruptcy is a business reorganization plan, often used by large businesses to help them stay active while repaying every creditor separately with a repayment plan.  However, the U.S. Congress recently enacted the Chapter 11 Subchapter V (5) bankruptcy specifically for protection and access to bankruptcy for a small businesses.

Chapter 7 bankruptcy does not need a repayment strategy, but it does require you to sell or liquidate non-exempt assets to satisfy small businesses’ obligations for the benefit of creditors.

Non-bankruptcy alternatives for distressed small businesses

The Coronavirus Aid, Relief, and Economic Security Act (2020) allowed for direct help to American small businesses.

From March 27, 2021, the CARES act raised the debt limit from $2,725,625 to $7,500,000 for Subchapter V cases under the CARES Act. This only applies to qualifying and electing Subchapter V small businesses.

If you are a small business debtor who wants to benefit from this bankruptcy protection, it may be complicated to determine your eligibility. You should seek the counsel of a bankruptcy lawyer to see if you can file for bankruptcy protection.

Bankruptcy might not be your only option as a small business owner in financial distress. You may also consider:

• Obtaining additional financing
• Selling your business
• Closing your business 
• Negotiated creditor workouts
• Dissolution or winding down of the business

Working with a law firm as a more efficient alternative

Suppose you are planning on taking advantage of the small business reorganization act and you want to dodge the worst-case scenario. In that case, it is advisable to work with a law firm that understands small business bankruptcy business reorganizations.

Privileges of the bankruptcy attorney-client relationship

A bankruptcy attorney understands perfectly well a bankruptcy process and the bankruptcy code. For them, showing up at the bankruptcy court under financial distress is every day.

If you are still having doubts, you must remember the attorney-client relationship is confidential, which means that the lawyer cannot be forced to testify against you in court.

The attorney can also help you choose the right type of bankruptcy for your business and give you an objective opinion about your case based on your historical financials.

Your lawyer will also be able to help you develop a reorganization plan and negotiate with your creditors. You can organize with them a workout plan to get more cash, how to get new capital, how to continue operating with a debtor, and how to benefit from any automatic stay.

Additionally, if you have any questions about the bankruptcy process for business owners, your lawyer will be able to answer them.

If you are thinking about filing for bankruptcy in Michigan, you need to know a few things. Bankruptcy is a process that has certain requirements. It can also determine different situations in people’s lives.

Each person’s financial situation is unique, and the specifics might vary significantly.  Discharging or reorganizing your debts can provide relief, but it’s important to understand what this process entails.

Your bankruptcy attorney should be able to provide you with an honest opinion of whether filing for bankruptcy is the best solution to your financial problems. A good law firm will never propose it if it isn’t appropriate for you.

In the United States, who is in command of bankruptcy laws?

The US Constitution gives the US Congress the power to make laws about bankruptcy for the whole country.

Legislators have passed several laws about bankruptcy. The most recent law is The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). This law governs how bankruptcy works in our country.  Additionally, each state has the right to make its laws as it relates to the state-allowed exemptions you are entitled to in bankruptcy.

And across the country?

There are 90 districts for bankruptcies across the country. The bankruptcy courts have their own offices which clerks run.

The United States bankruptcy judge is the court official with decision-making authority in federal cases, which are heard in the United States Bankruptcy court.

Five questions for your initial consultation with a bankruptcy lawyer

First of all, remember that most law firms offer a free consultation before you hire them for a bankruptcy case.

A free consultation helps you decide before hiring a bankruptcy lawyer because you can ask some important questions that can make all the difference for your entire process before showing up at the bankruptcy court.

Question #1 Do you recommend filing bankruptcy in my case?

While the circumstances may appear comparable, each person’s circumstance is unique. Any bankruptcy lawyer must be able, according to his or her experience, to give you an honest assessment as to whether you should file for personal bankruptcy.  This assessment can be very accurate so long as you, the client, are providing accurate information regarding your entire financial/asset situation.

Question #2 How do I prevent my bankruptcy case from being dismissed?

Bankruptcy cases can be dismissed for a variety of causes, including fraudulent conduct (such as embezzlement) and the failure to submit the necessary documentation to the court.

When you submit your papers, you must tell the truth and provide complete financial information. This includes any investment or real estate holdings, as well as other income sources and assets.

If you make a fraudulent statement on your paperwork or otherwise try to defraud the system, the court will most likely reject your application and issue a denial of discharge. You may also be prosecuted by the department of justice for committing a crime.

In most cases, to qualify for bankruptcy, your disposable income must be lower than the state average based on your family size. This is called the means test. The test compares your yearly income for the six months beforehand against that of a typical family in the state.

All debtors are required to complete a credit counseling course before bringing a claim and a debt management course before obtaining a discharge, according to the law.

When you complete each course, you’ll get a certificate of completion to submit to the court. If neither certificate is submitted, your case will be dismissed or you may not receive your discharge in bankruptcy.

Question #3 Which type of bankruptcy is the best for my case?

A bankruptcy lawyer can’t respond to this without first considering your property and debt types. You’ll also need to explain how much money you make.

Chapter 7 bankruptcy 

Chapter 7 bankruptcy can help people who do not have a lot of money and who can protect their property with bankruptcy exemptions after considering the non-exempt assets.

One of the benefits of Chapter 7 is that it is over in about four months. However, any property that is not covered by a bankruptcy exemption will be sold to pay off your creditors according to the bankruptcy code.

Chapter 13 bankruptcy 

Individuals with a steady income who can pay creditors over a three- to five-year repayment plan are eligible for Chapter 13.

It’s a fantastic tool for debt relief and reorganizing, as it can help individuals catch up on their mortgage and vehicle payments. You may keep all of your property in Chapter 13 as long as you can repay creditors the amount of money owed on the exempt property through the plan.

According to the bankruptcy code, the average duration of a Chapter 7 bankruptcy is three months, whereas Chapter 13 bankruptcy usually lasts three to five years because it is a debt repayment program.

Means test

The main objective of the means test is to force higher-earning debtors to repay part or all of their debt through Chapter 13 rather than allowing them to do so through Chapter 7.

All property that a Chapter 7 filer can’t protect with an available exemption may have that property sold by the Chapter 7 Trustee to use those sale funds to repay the bankruptcy creditors you listed in your case. . Most filers who have a choice choose Chapter 7 unless they own an important non-exempt property they want to keep.

Question #4 What is the real cost of bankruptcy (and are there additional costs)?

If you are going through this process, the costs include:

• credit counseling course fees
• court filing fees
• bankruptcy attorney fees (unless you file on your own)

Filing fees are the same throughout the country, but attorney charges vary depending on where you live, the complexity of your case, and the attorney.

Unless your attorney’s fees fall below the so-called “no-look” level that is recognized as reasonable, your court will evaluate them in Chapter 13 bankruptcy. The level of legal fees varies from one district to another, so check with your local court before hiring an attorney.

You should feel confident that one attorney is never your only option. Do not be afraid of paying higher fees to your lawyer when filing for bankruptcy if that will give you peace of mind.

Question #5 Will I be able to eliminate all of my debts?

A bankruptcy attorney will be able to tell you if you can discharge or get rid of credit card obligations, medical and utility bills, personal loans, back rent, and other debts.

In other situations, debt relief may include getting rid of your mortgage and automobile payment, but you must return the property to the creditors if you don’t fulfill your obligations as agreed.

Although you may not be able to eliminate other debts, such as child support obligations or educational loans in most cases, and tax debt incurred recently, you might still be able to negotiate a settlement.

Expect your lawyer to inquire if you have any non-dischargeable obligations. You can get a head start by checking out this list of debts that you cannot discharge.

Finding an experienced bankruptcy lawyer

If you are thinking about going through a bankruptcy process, though you can do it on your own, it is advisable to look for a law firm that is practicing bankruptcy law.

Screening prospective bankruptcy lawyers is the first stage in choosing one. You need to interview a few bankruptcy attorneys to find the right one for you. Make sure you find someone who you feel comfortable with and who understands what you’re going through.

Alternative options to finding a bankruptcy attorney

Most law firms also have their contact at your local bar associations, but it is not the only one.

Websites that can assist you in locating bankruptcy lawyers abound on the internet, but traditional approaches are still beneficial. Inquire with neighbors, as well as friends and relatives.

Some websites that can help you find a good attorney to file for bankruptcy are:

• American Bar Association
• Federal Court System
• Legal Services Corporation

FAQ

How long does it take to file bankruptcy in Michigan?

The time it takes to complete a case is usually 4-5 months, but, once the case is filed, the court’s protection is immediate. This implies that creditors will not contact you again, send you letters, seek money from you through collections, or file legal actions such as wage garnishment.

What are the consequences of filing bankruptcy?

Bankruptcy may have a negative influence on your immediate monetary situation. After bankruptcy, obtaining credit might result in higher interest rates. Obtaining credit after filing for bankruptcy may necessitate security deposits.

Should I close my bank account before declaring bankruptcy?

It depends on the type of account held, (i.e., through a credit union or a traditional bank) and whether you still owe money to the banking institution.  You’ll need to open checking and savings accounts with a bank that doesn’t deal with any of your debts to file bankruptcy. You don’t have to terminate other accounts. leave them open and report them or have your lawyer do it.