Bankruptcy Dillon SC

Bankruptcy is a legal process that occurs when a person or organization has incurred debts, but is financially unable to pay them all. It may be voluntary, which means the debtor files the bankruptcy petition, or involuntary, which means the creditors, rather than the debtor, begin the proceedings. Bankruptcy cases cannot be filed in state courts. They are, instead, filed in bankruptcy courts, one of which exists in each of the ninety-four federal judicial districts in the United States. It is then up to the court to decide whether bankruptcy should be declared.

The main purposes of bankruptcy are to help both the creditors and the debtor. Through a bankruptcy declaration, creditors may be able to recover at least a part of the money owed to them. For the debtor, the process is a way of making a fresh financial start, released from liability for unsecured debts and therefore free of the risk of prosecution by creditors. A declaration of bankruptcy will usually have an adverse credit rating effect, but this can be balanced by the new financial start and the ability in some states to keep various assets.

Since 2005, the United States Bankruptcy Code has required most debtors to meet with an approved credit counseling agency for a briefing before being permitted to file a case in bankruptcy court. A list of approved providers in most states for this type of briefing is available from the United States Trustee program, the section of the Justice Department that supervises the running of bankruptcy cases. The exceptions are the six judicial districts in North Carolina and Alabama, where the counseling providers are approved by the bankruptcy administrator offices in these districts.

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Also known as "straight bankruptcy," Chapter 7 bankruptcy refers to the Bankruptcy Code chapter that allows for the sale of the debtor's non-exempt property. Non-exempt property can include such assets as household furnishings, cars, and work-related tools. Exempt property includes that which is subject to mortgages and liens. The proceeds of the sale are then distributed to the creditors, after which the debtor is free of most debts apart from possible alimony payments and taxes.

In a Chapter 7 bankruptcy proceeding the filing of a repayment plan is not required. The sale of the non-exempt assets and the payments to creditors is carried out by the bankruptcy trustee according to the Bankruptcy Code provisions. All businesses and individuals can file for Chapter 7 bankruptcy subject to a means test, if the current monthly income of the debtor exceeds the state median. The discharge of all dischargeable debts usually takes place within four months, unless an interested party files an objection to the discharge or seeks to extend the objection time. Anyone considering a Chapter 7 bankruptcy, however, is strongly advised to consult a bankruptcy attorney, because a Chapter 7 discharge is subject to various exceptions.

While a Chapter 7 bankruptcy can result in the loss of property, it also enables the debtor to make a new start fairly soon. A debtor who falls into financial difficulties once more is able to file again for bankruptcy under Chapter 7, but not until eight years has elapsed from the previous discharge. Debtors who want to find an alternative to the financial relief provided by Chapter 7 bankruptcy should consult a bankruptcy attorney.

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Also known as "reorganization bankruptcy" or a wage earner's plan, Chapter 13 of the Bankruptcy Code enables debtors with regular income to plan to repay their debts over a three to five year period. People who want to keep non-exempt income that would be lost under a Chapter 7 bankruptcy may prefer Chapter 13 for this reason. It also provides an option for people with predictable income from which they will be able to pay their debts after dealing with living expenses.

A Chapter 13 plan cannot provide for debt repayments for over five years. With the help of a bankruptcy attorney, under Chapter 13, a debtor can prepare a repayment plan to make installment payments to creditors over whatever period the bankruptcy court allows within the five years. Unless the court approves a longer time, this will be three years, if the current monthly income of the debtor is less than the applicable state median, and five years if the current monthly income of the debtor is more than the applicable state median.

Reasons for filing a Chapter 13 bankruptcy can range from not wishing to lose non-exempt property such as a home to a determination to wipe out debts and start again with a clean slate. If you decide on Chapter 13, a bankruptcy attorney will, however, remind you that you must still make all your mortgage payments on time while the Chapter 13 plan is in force. Among the other advantages of Chapter 13 bankruptcy is the fact that secured debts, other than a mortgage for your main residence, can be rescheduled, which result in lower repayments.

Do you have Credit Card Debt? Call 800-689-1714