Based on our combined expierence of 38 years in the legal profession, we are prepared to represent bankruptcy clients within all applicable States and Territories of the United States.
For your convenience, the following is a primary overview of the most basic types of consumer bankruptcy. (Also, refer to the "BANKRUPTCY" drop-down on the left column.)
Chapter 7: Otherwise known as "liquidation," a Chapter 7 is designed as an orderly, court-supervised procedure by which a Court-appointed Trustee is given the authority to collect the assets of the Debtor's estate, reduce the assets to cash, and make distributions to creditors, subject to the Debtor's right to retain certain exempt property and to retain/reaffirm the rights of certain secured creditors. Because there is usually little or no "non-exempt" property in most Chapter 7 cases, there may not be an actual collection and liquidation of the Debtor's assets. These cases are called "no-asset cases." Most Chapter 7 cases are "no-asset" cases, which simply means that the Debtor does not have non-exempt property for the Trustee to collect and sell. "Exempt property" is property that a Debtor is allowed to keep as a foundation of a new, fresh economic start. In most Chapter 7 cases, the Debtor receives a discharge that releases the Debtor from personal liability for certain dischargeable debts. The Debtor normally receives a discharge three to four months after the Petition was filed.
Chapter 13: Generally, filing a Chapter 13 is preferred by Debtor(s) who have a valuable asset, such as a home with substantial positive equity, and that is not completely covered by standard exemptions and that the Debtor(s) wish to keep in their possession. This is possible because under Chapter 13, a Debtor proposes a plan to the bankruptcy court to re-pay creditors over a three to five year period during which time the Debtor can make up overdue payments on any assets and pay into the plan the equivalent value of any assets not cover by the standard exemptions. During this three to five year period, the law forbids creditors from starting or continuing collection efforts. Because the Debtors' plan will require regular monthly or biweekly payments to the Trustee, Chapter 13 relief is usually only appropriate for an individual Debtor who has a regular and consistant source of income. Thus, a Chapter 13 is also called a "wage earner's" bankruptcy plan.
Of note, the new bankruptcy law requires that Consumers who have a household income greater that the median income for their household size, in the county where they live, are subject to and must meet the requirements of a "Means Test." The Means Test involves an analysis of the the Consumer's household budget. The Consumer's monthly living expenses are determined by using a combination of objective IRS printed standards and actual subjective Consumer(s) family's monthly living costs. The monthly income is the average income that the Consumer(s) received from all sources within the past six (6) months of filing for Chapter 7 or Chapter 13 bankruptcy relief. Indeed, the Means Test makes it harder for some people to be eligible for Chapter 7 relief. If your budget analysis does not meet the Chapter 7 Means Test requirements, then, the person will likely need to seek relief from their debts under Chapter 13. Nonetheless, both Chapter 7 and Chapter 13 provide Consumer(s) with relief from their debt and filing of either Chapter stops creditors from pursuing their collection remedies available under the state law.
Also, the new bankruptcy law requires Consumers to provide a more complete set of documents when filing their income/asset/debt/liability Schedules in both Chapter 7 and Chapter 13 cases. In addition, Consumers must also include a credit counseling certificate, a debt relief agency disclosure document, copies of pay-stubs received within the last sixty (60) days from the date of filing, usually the last three (3) years of tax returns, updated evidence showing any changes in their household income during the past year and statements showing how the Consumer's Schedules were calculated and a photo ID with official proof of Consumer's Social Security Number. If the Consumer fails to provide any of this infomation within forty-five (45) days of filing, then, the Trustee (government's agent) will dismiss/revoke your petition for bankruptcy relief (that is, you will receive no relief/discharge from debts).
Note, the Consumer(s) must receive a counseling Certificate from a non-profit agency approved by the U.S. Trustee before they can file Chapter 7 or Chapter 13 Petition for bankruptcy relief. The two (2) counseling sessions may take place on the telephone or over the internet. (Ihrke & Littlejohn, PLLC will coordinate those arrangements for you). The counseling sessions must take place within 180 days of filing your bankruptcy case. After proof of completion of these sessions, the counseling agency will provide the Consumer(s) with a Certificate and a copy of any debt repayment plan developed by the Credit Counseling Agency. This Certificate must be filed with the bankruptcy court along with the Petition and the Schedules for both the Chapter 7 and Chapter 13 cases.
To prevent fraud or misrepresentation, Consumers who file for bankruptcy are subject to random audits by the government. Based on the "totality of the circumstances", this audit may be the basis to revoke or severely modify the earlier discharge as previously granted by the government. This reversal of a Consumer's relief/discharge of certain debts will be applied if the Consumer/Debtor fails to cooperate with the auditor or fails to satisfactorily explain any material misstatement in the Petition or Schedules that were filed with the bankruptcy Trustee/court.
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TAXATION/TAX ISSUES:
The actions and solutions of your taxation/tax issues will vary depending on your unique and spectific circumstances. Keeping in mind the experience and education of Fred, he is well equipped to resolve your taxation and tax issues.
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DISCLAIMER: The summaries and statements made in this website are NOT legal advise, rather the information is provided to help prompt your inquiries to clarify terms and to familiarize yourself with new information and concepts that you may refer to when you contact us and ask us about your unique circumstances and situation.
