Bankruptcy is not usually a person's first choice in dealing with their creditors. At Law For Cheap we offer free consultation to explain the pros and cons of bankruptcy. Often mounting debt can be fought, and debtor defense is often an option.
If, after being consulted, a client feels that bankruptcy is their best option, our team of professionals will prepare the bankruptcy petition for the client. One of our attorneys will then accompany the client at their 341 Creditors Meeting.
Our team is dedicated to explaining the entire bankruptcy process to each of our clients. In addition to preparing bankruptcy applications, the attorneys at Law For Cheap have practiced bankruptcy litigation. The two most common forms of bankruptcy applications filed by our firm are Chapter 7 and Chapter 13 bankruptcy petitions.
At Law For Cheap, a standard Chapter 7 bankruptcy petition, which includes both filing the petition and representation at the 341 Creditors Meeting, will cost $1, 200.00, plus the Federal Bankruptcy Court filing fee of $299.00. A standard Chapter 13 bankruptcy petition will cost $1, 500.00, plus the filing fee of $299.00.
Types of Bankruptcies
The different types of bankruptcies are categorized according to the chapter they fall under in the Federal Bankruptcy Code. The most common types of bankruptcy are:
- Chapter 7: This is the most common type of bankruptcy. Chapter 7 bankruptcies liquidate most of a personal debtor's debts. A downside of Chapter 7 is that the debtor may lose property they own, such as their home. That is why some people choose to go bankrupt using the other types of bankruptcies described below. There are some exemptions to the property the personal debtor will lose under Chapter 7, as a good portion of their property is exempt. It is best for a personal debtor to consult with a bankruptcy expert to know what property they can or cannot keep under Chapter 7.
Note, a Chapter 7 bankruptcy cannot be used to get rid of recent taxes, child support, alimony, student loans (n.b. for the most part), personal injury judgments caused by drunk driving, criminal fines or restitutions, or debts that involve fraud or intentional wrongdoing.
- Chapter 13: This type of bankruptcy does not liquidate all the personal debtors debts, but it does allow the personal debtor to keep all of their property. To qualify for this type of bankruptcy, the personal debtor must have regular income, unsecured debt less than $360, 475.00, and secured debt under $1, 081, 400.00. Under Chapter 13, the personal debtor will enter into a payment plan through a trustee. The repayment plan will pay the debtor's creditors over three to five years and pay 10% to 100% of the debt owed, depending on the debtor's income and the amount and kind of debt.
- Chapter 11: This type of bankruptcy is used for personal debtors, or corporate debtors, who own a business and want to pay their creditor's through a reorganization. The reorganization plan must be proposed to the creditors, who vote on it; if a majority of the creditors accept the plan, then an application can be made to the Bankruptcy Court to confirm and monitor the plan.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Bankruptcy law has changed a lot in the last decade with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Arguably, the most noticeable differences that occurred because of this act for debtors filing bankruptcy before the act are:
1) The introduction of a "means test" by which certain debtors are prohibited from filing for bankruptcy if their income is too high;
2) The requirement that a debtor undergo credit counseling;
"Know what happens when an individual declares bankruptcy and how it affects his or her life." - Marilyn vos Savant
Did you Know?
- That it is possible to put a stop to the harassing phone calls at home and work.
- That you may be able to keep most or all of your property and possessions under state or federal exemption statutes, while erasing debt from credit cards, medical bills, unsecured loans, and most other obligations.
- Many lenders do not automatically disqualify an applicant because they have previously filed for bankruptcy.