Personal bankruptcy comes in two types: Chapter 13 and Chapter 7. Chapter 13 is often referred to as “The Wage Earner Plan” or “reorganization bankruptcy”. In this program, some or all of your debt is repaid and the remaining debt discharged. A trustee assigned by the bankruptcy court assumes oversight of all your property, assets and debts. He or she will review your bankruptcy petition and then devise a schedule under which you will make payments to the court. Those payments will be disbursed among your creditors.
Chapter 7, however, is a different plan all together. Chapter 7 bankruptcy is known as “liquidation” or absolute bankruptcy. In this plan, the debtor is relieved of all or most debts, but you may be required to sell or “liquidate” many of your assets to pay off some creditors.
Until the Bankruptcy Abuse and Consumer Protection reforms were enacted in 2005, bankruptcy petitioners had the choice of which type of bankruptcy they wished to file based on their own reasons and some guidance from the court and their attorney. However, now, with the new reforms in place, debtors must first pass a “means test” to determine whether or not they are financially able to pay back at least some of their accumulated debt. Tom’s River bankruptcy lawyers can help you define your eligibility with this test.
Before you can file for Chapter 7, you must first complete credit counseling with an approved government agency. This requirement is part of the new reforms and is designed to help debtors avoid the situations that landed them in bankruptcy in the first place. Bankruptcy lawyers in Tom’s River can provide you with a list of approved credit counseling agencies.
The bankruptcy petition is a relatively simple, two-page form. The cost of filing is approximately $274 and the entire process takes between four and six months to complete and usually involves one court appearance.
Once your case is in the hands of the trustee, you may not sell, transfer or dispose of any of your assets. No debts can be paid off and no major acquisitions may be made. Property is classified as either “exempt” or “non-exempt” meaning that you may or may not keep this property at the end of the bankruptcy process. Property that is considered exempt may vary from state to state.
The court will schedule a creditor’s meeting at which your creditors have the option of appearing and questioning you under oath about your indebtedness. This is usually the only court appearance you are required to make.
After all of the requirements have been met and all possible debt paid off, the trustee will discharge all remaining debt that is eligible for discharge. Some debts are exempt from the bankruptcy process, however, and you will still be responsible for them. These may encompass student loans, alimony, child support, some taxes and any other debts the creditors have raised objections to.
From this point, the debtor cannot be held responsible for any debt discharged under the Chapter 7 plan. However, if there is any inheritance, insurance payoff or acquisitions from a divorce settlement pending, you must notify the court if they occur within 180 days after the date of your filing.
A Chapter 7 bankruptcy will remain on your credit record for 7 to 10 years and may affect your future ability to obtain credit, insurance and sometimes work. Another Chapter 7 cannot be filed for 8 years. Contact Tom’s River bankruptcy lawyers for further information.

Popularity: unranked [?]