Bankruptcy is a legal process that provides debt relief for individuals and entities that are unable to pay their debts. This procedure is often imposed by a court order, but the debtor may initiate it as well. Listed below are the most common types of bankruptcy and how they are handled. The bankruptcy process can be difficult, but following some basic guidelines can help you navigate it successfully. This article outlines the basic principles of bankruptcy law and provides information on how to file for Chapters 7 and 13.
Chapter 7
A typical Chapter 7 bankruptcy filer has a significant amount of debt, usually credit card or unsecured bills, and a few assets. This type of bankruptcy liquidates nonexempt assets to eliminate most of the debt. There are certain types of debt that are not dischargeable in a Chapter 7 bankruptcy, however. These include alimony, child support, certain taxes, and student loans. For more information on filing for Chapter 7 bankruptcy, see the following links.
Under Chapter 7, most debts are discharged. A discharge means that the debtor is no longer responsible for paying that particular debt. Certain types of debt, however, are not dischargeable, including taxes, past-due child support payments, and certain kinds of student loans. The amount of non-dischargeable debt can vary widely from state to state. Your local bankruptcy attorney can help you determine whether you have this type of debt.
To file for Chapter 7, you must meet certain income requirements. First, your income must fall below the state’s median income. This income metric can vary significantly between states. The second test compares your income to essential monthly expenses. If you fall below this threshold, your filing will be denied. However, this is not a complete ban on filing for Chapter 7 bankruptcy. It may help you get a fresh start. If you don’t qualify for Chapter 7, you might want to consider filing for another type of bankruptcy.
Chapter 13
In Chapter 13, the debtor agrees to pay back all his debts in a manageable monthly payment plan. Under this plan, he can keep his home, vehicle, and other assets. Using this method, a debtor can save his home from foreclosure, pay off all taxes, and reduce high-interest car loans. However, the payment plan must be backed by a solid payment plan to qualify. The following information will help you make the most informed decision when filing for Chapter 13.
First, consider your current financial circumstances. If you have recently lost your job or had some other life crisis, Chapter 13 may not be right for you. Moreover, this type of bankruptcy has strict requirements, and is not for everyone. Generally, your total secured debts must be less than $1184200. Your unsecured debts cannot exceed $394725; and you must have lived in the state for at least 2 years. Lastly, you must have sufficient disposable income to pay back your debts.
Unlike in a traditional bankruptcy, a Chapter 13 plan releases you from all your debts, except for those specifically disallowed under section 502. A discharge also prevents creditors from initiating or continuing legal actions against you. A chapter 13 plan may also protect third-party creditors. It may be the best option for you if you have substantial assets. In addition, this plan offers protection from the creditors that could otherwise make you lose your home.
Social Security payments
Under bankruptcy law, you can get your Social Security payments discharged. Most people are unaware that they’ve overpaid the SSA. But SSA can demand that you repay the overpaid amount if you didn’t notify them of your change in circumstances. If you’re disabled and cannot work anymore, you might be eligible to receive Social Security payments. If you have filed for bankruptcy, you can get your overpayments discharged.
Although your creditors can take your social security benefits, you can keep them if you can prove that they’re a part of your monthly income. The court will consider these benefits as basic living expenses and will protect them from your creditors. The bankruptcy trustee will have a lot of authority and will allow you to keep your money if you can show that you’re receiving them. It’s important to be aware of how your bankruptcy can affect your social security benefits.
Most creditors cannot levy Social Security payments if they’re deposited through a direct deposit or a prepaid card. This protection applies even if the company sues you and wins. Third-party debt collectors cannot threaten to garnish or bank levy your Social Security benefits if they’re your only source of income. Additionally, if they threaten to garnish or collect your Social Security benefits, they’ll likely be accused of violating the Fair Debt Collection Practices Act.
Unemployment compensation
When it comes to filing for bankruptcy, unemployed people often wonder what can happen to their unemployment compensation. If they have been overpaid, the unemployment office can withhold future benefits as a penalty. In some cases, a criminal investigation may be initiated. Unemployment compensation debt can also complicate a bankruptcy case. Because it is considered a debt owed to the government, it is not exempt from discharge during the bankruptcy process.
While many people claim to be eligible for unemployment benefits, the government makes mistakes. Sometimes, this leads to overpayments. These overpayments are not free money and are simply considered part of your debt, which can be difficult to pay back. Therefore, bankruptcy attorneys are necessary to protect your rights to unemployment compensation. You can start by requesting a free consultation from Nguyen Law Group today. It only takes a few minutes.
Some states automatically include the additional $300 when calculating the benefits that are owed to you. Other states do not require any additional action, so those who already receive unemployment benefits can receive the benefit without taking any extra steps. These changes affect the job market and the system. If you have been unemployed for at least three months, it is important to apply for additional assistance if you need it. These additional benefits can help you meet your monthly expenses.
Limited equity in a home, car, or truck
The bankruptcy exemption does not protect the entire value of your car, home, or truck. Only the equity in the car is protected, so you might be able to pay off the entire loan in full with the exemption. However, if you are behind on payments, your lender can repossess the vehicle. The good news is that you can apply for an increase to your exemption if you are disabled.
The amount of equity in a car, home, or truck under bankruptcy law varies, but generally speaking, a vehicle can be exempted if the debtor owns it. A car’s equity is its market value, less any loan payoff. A vehicle with little or no equity is of no value to creditors, so it is not worth a lot. Generally, you can keep the car you owe as long as you make your payments.
A bankruptcy exemption allows you to protect the equity in a home or automobile through the federal and state bankruptcy exemption system. Federal bankruptcy exemptions protect your primary residence, but some states also allow you to protect a portion of the equity in your vehicle. If your home is not exempt, the trustee will likely sell it to satisfy your debt. However, if you own a second car, vacation home, or valuable collection, the exemption does not apply to them.
Trade tools
In bankruptcy law, your tools of trade are exempt from seizure or attachment. If you’re a freelance writer, for example, these items may be an important part of your business. In fact, your tools of trade can even be exempt from eviction. Here’s what you can do to protect your trade tools. Keep reading to learn more. Hopefully, this article will help you avoid losing these valuable items.
A good way to protect your tools in a bankruptcy case is to make sure they are valued correctly. If you’ve borrowed money to buy tools of trade, you should make sure the equipment has a high enough value to avoid lien. This is important for several reasons. First, you’ll need to establish the fair market value of your tools. Otherwise, you’ll end up losing the tools. If you owe more than the tools’ value, you’ll likely have to pay the full cost of the tools.
Second, trade tools are generally exempt from seizure and attachment. In most states, tools of trade are items used to earn a living. Examples of tools of trade include a hammer, stethoscope, and delivery vehicle. Moreover, the exemption only applies to tools owned by the debtor personally, not via a separate legal entity. If you own an interest in a company, you may be able to keep the tools that make your business run smoothly.