Posted on: 06th Nov, 2005 10:55 pm
when you're in debt and cannot keep up the payments, you may consider filing bankruptcy. there are different types of bankruptcy filings. this article explains the 5 types of bankruptcy so that you can explore all options prior to the filing.
- chapter 7:
this is where non-exempt assets are sold off by a court-appointed trustee in order to pay your creditors/lenders. businesses can also file chapter 7. check out what chapter 7 bankruptcy is all about. - chapter 13: this is a type of bankruptcy wherein you come up with a repayment plan and submit it to the court for approval. once it is approved, you can follow the plan and pay off your debts within 3-5 years. watch out for more on chapter 13.
- chapter 11:
this type of bankruptcy is mostly filed by businesses including llc, corporations and sole proprietorships. chapter 11 helps a business to reorganize its finances and debts and allows it to operate under a court-appointed trustee. through chapter 11, a business pays off its debts by means of a repayment plan approved by the trustee and creditors. however, individuals can also file chapter 11.
eligibility criteria of chapter 11:
- the debtor needs to attend credit counseling session within 180 days prior to the filing.
- there has been no bankruptcy dismissal within the past 180 days of filing.
- value of the business should exceed total sum of its assets, but the business has goodwill and it will do well after reorganization.
how long it takes to receive discharge:
usually chapter 11 bankruptcy provides discharge after 3-5 years of repayment. however at times, such a case may last for 20 years, though it's rare. - chapter 9:
it is a type of bankruptcy filed by municipalities (county, city, township, school district etc) in order to negotiate a repayment plan with their creditors. chapter 9 helps to reduce the debtor's outstanding debt balance or interest rate. moreover, creditors may agree to extend the loan term or allow the debtor to refinance debts.
among the different types of bankruptcy, chapter 9 is the most suitable for municipalities as it protects their assets from being sold off as in chapter 7. the eligibility criteria for filing chapter 9 are:
- the municipality should be defined as "political subdivision or public agency or instrumentality of a state".
- it should be authorized by the state to be a debtor under chapter 9.
- the municipality should be insolvent.
- the municipality has negotiated with creditors but failed to reach an agreement.
- chapter 12:
among the types of bankruptcy, the only one suitable for family farmers and fishermen is chapter 12. the debtor can retain his assets while making payments under a 3-5 year repayment plan worked out with creditors.
the eligibility criteria are given below:
- the debtor must have regular annual income.
- total debts shouldn't exceed $3,237,000 (for farmers) or $ 1,500,000 (for fishermen).
- for farmers, 50% of the debt must arise from the operation of a family farm and for fishermen, at least 80% of the debts should be related to fishing operation.
Hi Guest
As far as I know, the LLC enjoys no discharge protection from it's owner's bankruptcy filing. You should note that the LLC is a separate legal entity and according to my knowledge, it is certainly eligible to file bankruptcy on its own.
Thanks.
As far as I know, the LLC enjoys no discharge protection from it's owner's bankruptcy filing. You should note that the LLC is a separate legal entity and according to my knowledge, it is certainly eligible to file bankruptcy on its own.
Thanks.
Hi everyone have a question regarding inheritance. One of my uncles died in 2005 and had left quite a large sum of money as inheritance. Well, with time I had spent the whole amount. Im now planning to file bankruptcy now. Will the inheritance be considered while I file bankruptcy and will it disqualify me for the filing?
Hi Rihannah,
There are several factors to consider in this issue. One of the important factors is the state in which you live in. Some states allow a borrower to keep the inheritance and then file bankruptcy whereas in other states, you will have to give away your inheritance to the bankruptcy trustee. The amount of money that you receive as inheritance will also be considered when you file for bankruptcy. You should also note that a bankruptcy trustee will always be concerned about how he spent the money rather than the time taken to spend the money. It would be better if you could contact an attorney who specializes in asset protection and discuss your options with him.
Thanks
There are several factors to consider in this issue. One of the important factors is the state in which you live in. Some states allow a borrower to keep the inheritance and then file bankruptcy whereas in other states, you will have to give away your inheritance to the bankruptcy trustee. The amount of money that you receive as inheritance will also be considered when you file for bankruptcy. You should also note that a bankruptcy trustee will always be concerned about how he spent the money rather than the time taken to spend the money. It would be better if you could contact an attorney who specializes in asset protection and discuss your options with him.
Thanks
hi there need some help from you guy i have a second mortgage and im planning to file chapter 7 bankruptcy. but, im behind on my second mortgage payments. i guess this means the second lender can foreclose the property. what should i do so that i can save my home? will reaffirming the debts help me in any way??? one more thing that i need to ask can i only refinance the 1st mortgage and let the 2nd mortgage remain as it is? will it be discharged along with my unsecured debts in bankruptcy?
Hi Raina,
If you have defaulted the mortgage payments, the lender has the right to foreclose the property. However, if you have filed for bankruptcy, the lender won't be able to foreclose the property as there is an automatic stay on the creditors. But your lender can always apply to the court for removing the automatic stay. If the court removes the automatic stay, then your property can be foreclosed upon.
In my opinion, you will have to reaffirm both the mortgages in order to save your property. Apart from this, your unsecured debts can be discharged.
If you have defaulted the mortgage payments, the lender has the right to foreclose the property. However, if you have filed for bankruptcy, the lender won't be able to foreclose the property as there is an automatic stay on the creditors. But your lender can always apply to the court for removing the automatic stay. If the court removes the automatic stay, then your property can be foreclosed upon.
In my opinion, you will have to reaffirm both the mortgages in order to save your property. Apart from this, your unsecured debts can be discharged.
hello everybody…can you give me some suggestions… i and my wife are planning to file bankruptcy. but the problem is that my father has co-signed on our mortgage. how will my filing bankruptcy effect my father…can we release him from the loan???
Hi Guest,
It will not be easy for you to remove your father's name from the mortgage. As a cosigner of the loan, he is liable to pay the mortgage dues if you could not pay it yourself. It is very important for you and your father to consult a bankruptcy attorney. This will help you what situations your father can face if you file for bankruptcy as the state laws vary from each other.
Rather than filing for bankruptcy, you should try listing the property for sale. If you get a buyer, then you may sell off the property and pay off the mortgage debts. This will help you in saving your father as well as your own credit. If there is a deficiency balance, then you'll have to pay it from your pocket. However, during the sale process, someone must continue to make the mortgage payments.
Take care.
It will not be easy for you to remove your father's name from the mortgage. As a cosigner of the loan, he is liable to pay the mortgage dues if you could not pay it yourself. It is very important for you and your father to consult a bankruptcy attorney. This will help you what situations your father can face if you file for bankruptcy as the state laws vary from each other.
Rather than filing for bankruptcy, you should try listing the property for sale. If you get a buyer, then you may sell off the property and pay off the mortgage debts. This will help you in saving your father as well as your own credit. If there is a deficiency balance, then you'll have to pay it from your pocket. However, during the sale process, someone must continue to make the mortgage payments.
Take care.
Hello… Hope you could give us some advice… Due to a large number of debts we will have to file bankruptcy within few days. Our debts are going up due to high interest rate (both mortgage and credit cards). We have realized that bankruptcy is our only solution, but we have a home in Mexico. This is free and clear. Will this home of ours will be lost if we file for bankruptcy, or is that property safe?
Hi Myers
You should take some appropriate steps to save your property located in Mexico. You'll have to determine the value of this asset prior to filing your case. This is because the property will be listed in your petition as an asset. You can contact an appraiser and he'll let you know the value of the property.
While you file for bankruptcy, avoid certain actions. It will help you in the long run. Do not avoid listing the property located in Mexico while you file bankruptcy. If you avoid listing, the bankruptcy trustee may penalize you and he can go after your property. Also you should refrain from transferring the property out of your name. If you transfer the property, it would become simply impossible for you to protect the asset.
Last but not the least, discuss your case with a bankruptcy attorney. He will not only help you filing the bankruptcy but will also give you his opinion about your property located in Mexico.
Thanks.
You should take some appropriate steps to save your property located in Mexico. You'll have to determine the value of this asset prior to filing your case. This is because the property will be listed in your petition as an asset. You can contact an appraiser and he'll let you know the value of the property.
While you file for bankruptcy, avoid certain actions. It will help you in the long run. Do not avoid listing the property located in Mexico while you file bankruptcy. If you avoid listing, the bankruptcy trustee may penalize you and he can go after your property. Also you should refrain from transferring the property out of your name. If you transfer the property, it would become simply impossible for you to protect the asset.
Last but not the least, discuss your case with a bankruptcy attorney. He will not only help you filing the bankruptcy but will also give you his opinion about your property located in Mexico.
Thanks.
Hi everyone,
I've filed Chapter 13 and now I would like to refinance my home loan. I have $50,000 in equity but would like to cash in around $10,000. Can I do this??? I am told that as I'm still in bankruptcy I could not cash out some equity. One more question...suppose if I sell off the property...in that case... do I get to keep the equity to purchase another house or is it taken by the bankruptcy court?
I've filed Chapter 13 and now I would like to refinance my home loan. I have $50,000 in equity but would like to cash in around $10,000. Can I do this??? I am told that as I'm still in bankruptcy I could not cash out some equity. One more question...suppose if I sell off the property...in that case... do I get to keep the equity to purchase another house or is it taken by the bankruptcy court?
hi guest
as far as i know, you'll be able to take out equity in your property though you are in a chapter 13 bankruptcy. the remaining equity will be considered an asset of your bankruptcy estate. that equity is protected only if your state bankruptcy laws allow it. however, you would require the bankruptcy court's approval in order to cash out the equity. moreover, you'll have to show a valid reason for the loan. but you should also note that not many lenders would come forward to give you a loan. those lenders who would provide you a loan would charge you a high interest rate.
as far as selling off the property is concerned, it will depend upon your state laws and bankruptcy court. you should contact an expert bankruptcy lawyer and discuss your case with him.
thanks.
as far as i know, you'll be able to take out equity in your property though you are in a chapter 13 bankruptcy. the remaining equity will be considered an asset of your bankruptcy estate. that equity is protected only if your state bankruptcy laws allow it. however, you would require the bankruptcy court's approval in order to cash out the equity. moreover, you'll have to show a valid reason for the loan. but you should also note that not many lenders would come forward to give you a loan. those lenders who would provide you a loan would charge you a high interest rate.
as far as selling off the property is concerned, it will depend upon your state laws and bankruptcy court. you should contact an expert bankruptcy lawyer and discuss your case with him.
thanks.
Hello everyonehere is my situationI hope you guys could help me had to file bankruptcy two years ago. At that time, I was leasing a car. My intention was to keep the vehicle by keeping the car payments current. Now I have a golden opportunity to buy a car with half the payment Im making now. Will I be able to stop the payments without any penalties from them? Or will I have to keep the vehicle for a year and half until the lease term ends?
Hi Guest,
If you suddenly stop the car payments, the lender can sue you as you had reaffirmed your car payments after your bankruptcy was discharged. The lease agreement includes the terms and conditions of the loan. Your lender can even charge off the loan to a collection agency which can again badly affect your credit. In my opinion, it would be better if you could wait for a year and a half till the lease term ends. Then you can try purchasing another car.
Take Care.
If you suddenly stop the car payments, the lender can sue you as you had reaffirmed your car payments after your bankruptcy was discharged. The lease agreement includes the terms and conditions of the loan. Your lender can even charge off the loan to a collection agency which can again badly affect your credit. In my opinion, it would be better if you could wait for a year and a half till the lease term ends. Then you can try purchasing another car.
Take Care.
I cannot make ends meet with my chapter 13. I am wanting to convert to Chapter 7 and loose everything. My bank said they would let me keep my car and arrange payments with me since I do not owe much on it. My appliances are through American General and Personal Finance. Do these companies actually come and get their stuff and how long before they do so. Also, my house is through State Farm, how long do they give you to move out. Will they put the house up for sale quickly. I live in a small town and do not want to see the house set there and go to waste. My town tries to keep things nice. Any help????
Hi KILEY,
You can contact your bankruptcy attorney and convert Chapter 13 to Chapter 7. Rules vary from lender to lender. It will depend upon American General and Personal Finance whether they would remove their stuff or not. You will have to leave the property as soon as the bankruptcy trustee orders the sale of the property to pay off your creditors.
You can contact your bankruptcy attorney and convert Chapter 13 to Chapter 7. Rules vary from lender to lender. It will depend upon American General and Personal Finance whether they would remove their stuff or not. You will have to leave the property as soon as the bankruptcy trustee orders the sale of the property to pay off your creditors.