Why file bankruptcy? To free yourself from an overload of debt and start a new future!
What is Bankruptcy?
Bankruptcy is a petition filed with a specialized Federal Court called Bankruptcy Court. It can absolve a person of all their debts and give them a fresh start in life. That’s why file bankruptcy to get another chance at life.
Is Bankruptcy new?
The power to pass a Bankruptcy act is given to Congress in the Original Constitution of the United States. South Carolina was originally settled with people from Debtor’s prisons in England. SO the Bankruptcy provisions were important. There have been a number of Bankruptcy acts since then. The latest Act was in 2005. The goal of bankruptcy has remained the same. So Why file bankruptcy? It is to give the person a fresh start in life.
There are three income testings to qualify for a Chapter 7 Bankruptcy. The first testing is the median test. Are you above or below the median[halfway] point for your household size? If you pass the median test, you do not do the second testing. If you are in the upper half of income for your size household, you must fill out the means test.
It looks at your income for the last 6 months to see if you have funds to pay creditors. Usually, people making more than $100,000 can have problems with the means test. It is complicated. The third test is a “good faith” test. It seldom figures into anyone’s bankruptcy unless they have special substantial assets and /or income. All this could make you ask a question why even bother with why file bankruptcy?
In addition, there are schedules for listing your expenses, income, and property. Your income should match the expenses after the debts are zeroed out. A high-income individual can have problems if their income is too high.
What do I keep in the Bankruptcy?
You keep your exempt property. Exemptions are under the Iowa Code and are rather lengthy. Basically, you keep the household together. You keep the furniture, your clothes, electronic devices, food, a $1000 in the bank, a$1000 tax refund, tools of the trade of a non-farmer up to $10000. There are additional provisions for exemptions. In most consumer bankruptcies, all the property is exempt.
Will I have to go to Court?
There is a brief hearing about your assets in front of a trustee assigned to the case by the US Trustee’s office. Most cases are cleared immediately as a no-asset case and can proceed to discharge. If the Trustee doesn’t clear the Bankruptcy, there could be additional hearings. If you want to reaffirm a debt[pay the debt ], you have to have a reaffirmation hearing. This is before the Bankruptcy Judge to determine whether the reaffirmation is in your best interests. .However, reaffirmations with credit unions do not require a hearing.
How long does a Bankruptcy take?
Usually, it takes about 90 to 120 days. The hearing with the trustee is around 30 days after you file the Bankruptcy, After the hearing, the creditors have 60 days to object to the bankruptcy.
Are there any other requirements?
You have to take a court-approved credit counseling session before you can file. Then you have to do a debtor education course after you file and before discharge. The usual cost of these two courses is around $35 a piece.
When is the Bankruptcy effective?
The day you file all the creditors are barred from any action and contact with you. Sometimes it takes a week or two for all the creditors to get notice and stop collection attempts. If you are being sued, a notice is filed in the lawsuit listing your Bankruptcy number and that case is stopped. After about 90days, you receive a discharge, and you are given the “Fresh Start “ in your life.