How to File for Chapter 7 or 13 Bankruptcy Protection

Q - What is the difference between Chapter 7 and Chapter 13?
A - The primary purpose of a chapter 7 is for a person who does not have the ability to pay all existing debt and needs a fresh start. The primary purpose of a chapter 13 for a person who is in fear of vehicle repossession, home foreclosure, garnishment or otherwise cannot meet their current debt obligations. Chapter 13 offers a plan repayment over a specific period of time. That period is usually from 3 to 5 years.

Q - Does it matter how much debt I owe?
A - Maybe, depending upon individual circumstances; you must qualify under the Bankruptcy Code. Most people filing Bankruptcy fall within the limitations but you need to consult an attorney regarding this question if this concerns you. Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $307,675 and noncontingent, liquidated secured debts of less than $922,975, or an individual with regular income and such individual's spouse, except a stockbroker or commodity broker, that owe, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts that aggregate less than $307,675 and noncontingent, liquidated secured debts of less than $922,975 may be a debtor under Chapter 13 of this title.

Q - What is the means test?
A - The means test is a calculation schedule used to determine whether a person is eligible to file Chapter 7 and for disposable income calculations in a Chapter 13. Basically it is a 6 month window of your income which determines which Chapter is appropriate for your unique situation.

Q - What does confirmation mean?
A - Confirmation is the point during your Chapter 13 Bankruptcy when the Court approves the Plan which you and your lawyer have submitted and after which the Chapter 13 Trustee begins making payments to your creditors.

Q - What does exemption mean?
A - Certain items of property are exempt under the law. In Tennessee Debtors exempt property under the Tennessee State Law (other states may or may not exempt under state law). That means the property that is exempt cannot be taken away from you. Exempt property exists not only in Bankruptcy but in case you are sued in Civil Court outside of Bankruptcy. The items include but are not limited to a homestead and other equitable estates, personal property totaling $4,000 per Debtor, clothing, family bible and school books, all family portraits and pictures, wedding bands, tools of trade, health care aids, certain disposable income amounts, child support, state pensions, certain insurance benefits and disability benefits, veterans and public assistance benefits, certain retirement plan funds or assets if the same is qualified under the Internal Revenue Code, Debtors right to receive certain awards such as victims compensation, worker's compensation and personal injury compensation.

Q - What debts are considered non-dischargeable under Bankruptcy?
A - You cannot discharge certain debts in Bankruptcy such as some IRS debt, most taxes, debt incurred to pay non-dischargeable taxes, most fines, court costs, restitution obligations, and other penalties and forfeitures. Any debt not listed on your creditor schedules, child support, alimony and other divorce obligations, student loans, debt for death or personal injury resulting from operating a motor vehicle while intoxicated and debt arising from fraud, breach of fiduciary duty, theft, or willful and malicious injury.

Q - What documents do I need to file Bankruptcy?
A - You will need your Social Security card, driver's license or state issued ID; your last two years of income tax return which is your 1040 filed with the IRS; your last six months pay stubs; a hand written list of all creditors including name, address, account numbers, balance, monthly payment, interest rate and date of services. We have a packet that has this information which may be picked up at our office.

Q - What if I did not have my last two years income tax returns?
A - You must contact the IRS or contact the business that filed your income tax return. You can also retrieve those items at on the Internet.

Q - What if I don't have my last 6 months pay stubs?
A - You must contact your employer or former employer for a printout of your earnings.

Q - How often can I file a Chapter 7 or 13?
A - In order to file chapter 7, after a previous chapter 7 has been filed, one must wait eight years from the date of the previous discharge. An example would be, the debtor received a Chapter 7 discharge on December 31, 2000 and must wait until January 2008 to file a second chapter 7 case.
For a chapter 13 bankruptcy, you must wait six years. However, there may be some exceptions to that general rule however.

Q - I just got out of a Chapter 13. How long do I have to wait before I can file again?
A - You must wait 6 years before filing a Chapter 7 unless you paid 70% or more to your unsecured creditors or unless you were simply dismissed from your Chapter 13.

Q - What is the difference between a discharge and a dismissal?
A - A discharge is the end goal of filing Bankruptcy. That is your debts are discharged within the bankruptcy filing and you walk away from the bankruptcy without owing any debts that are not long term, i.e. mortgage. A dismissal means the court has dismissed your case from Bankruptcy without disposing of your debts, which is the same as never having filed. Both of these may show up on future credit reports.

Q - What are the fees associated with filing Chapter 7?
A - $355 filing fee and $800 attorney fee plus additional fees for the credit counseling course and Debtor's Education Course.

Q - What are the fees associated with filing Chapter 13?
A - $310 filing fee and $3000 attorney fee plus the addtional fees for credit counseling and debtor education course. The filing and attorney fees are paid during the course of the plan and no monies required up front other than the courses.

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