Bankruptcy
We are a debt relief agency organized to assist those in need of filing for relief under the Federal Bankruptcy Code according to the Bankruptcy Reform Act. In October 2005, bankruptcy laws changed dramatically, and we are always on top of the changes to make sure you are getting the best protection available under the law.
The ordeal of deciding to declare bankruptcy can be quite shocking and disappointing. At Trammell Law Firm, we understand this and want you to know that we are here to help you. There are several options we would like to briefly discuss with you that could either completely wipe out your debts or consolidate them into manageable monthly payments.
Congress has designated the Trammell Law Firm as a debt relief agency to be able to assist people in filing for bankruptcy relief. The two main options to choose from are Chapter 13 or Chapter 7 under the federal bankruptcy laws. Chapter 7 bankruptcies can eliminate almost all of your debt, including judgments you have against you. We can file a Chapter 7 case for you for a flat fee and the total bankruptcy fee is often a mere fraction of your total debt. If creditors are threatening to repossess your car or foreclose on your home, the protection of a Chapter 13 bankruptcy prevents creditors from acting. A Chapter 13 case can be filed for only $50.00 up front.
Look to the following pages to learn more about each of these types of bankruptcy resolutions. The goal of Trammell Law Firm is to have all of our clients free from creditor harassment while on their way to financial peace.
If you are unsure of what to do, please contact us for a FREE consultation.
We truly care about your situation and sincerely want to help you. We will work around your schedule and are able to arrange to meet with you on evenings and weekends, if needed. When you call, please let us know if you have special scheduling needs.
CHAPTER 7 BANKRUPTCY
This plan allows a person to wipe out most of his/her unsecured debt and is most often filed by people who earn less in wages than the median and who have very few, if any, assets. Upon meeting certain criteria, a Chapter 7 plan will allow you to retain your home as well as a select few other assets that are exempt.
10 Frequently Asked Questions and Answers
1. What is a Chapter 7 bankruptcy case and how does it work? A Chapter 7 bankruptcy case is a proceeding under federal law in which the debtor seeks relief under Chapter 7 of the Bankruptcy Code. Chapter 7 is that part (or chapter) of the Bankruptcy Code that deals with liquidation. The Bankruptcy Code is a federal law that deals with bankruptcy. A person who files a Chapter 7 case is called a debtor. In a Chapter 7 case, the debtor must turn his or her nonexempt property, if any exists, over to a trustee, who then converts the property to cash and pays the debtor's creditors. In return, the debtor receives a Chapter 7 discharge, if he or she pays the filing fee, is eligible for the discharge, and obeys the orders and rules of the bankruptcy court.
2. Who is permitted to file and maintain a Chapter 7 case? Any person who resides in, does business in, or has property in the United States is permitted to file a Chapter 7 bankruptcy case, with the exception of any person who has intentionally dismissed a prior bankruptcy case within the last 180 days. To be permitted to maintain a Chapter 7 bankruptcy, a person must qualify for Chapter 7 under a process called means testing.
3. What is means testing? Means testing is a method of determining a person's eligibility to maintain a Chapter 7 case. Under this method, a person whose annualized monthly income from all sources exceeds the median annual income, as reported by the U.S. Census Bureau, for the person's state and family size, must show that he or she is not able to pay a minimum of $100 per month for 60 months to his or her unsecured creditors from his or her disposable monthly income in order to be eligible to maintain a Chapter 7 case. Disposable monthly income is a person's current monthly income from all sources less the person's permitted current monthly expenses. The Chapter 7 case of a person whose disposable monthly income is such that he or she is deemed able to pay $100 per month or more to unsecured creditors for 60 months will be dismissed or converted to Chapter 13 unless special circumstances exist.
4. Is there anything that a person must do before a Chapter 7 case can be filed? Yes. A person is not permitted to file a Chapter 7 case unless he or she has, during the 180-day period prior to filing, received from an approved nonprofit budget and credit counseling agency an individual or group briefing that outlined the opportunities for available credit counseling and assisted the person in performing a budget analysis. This briefing may be conducted by telephone or Internet, if desired, and must be paid for by the person. When the Chapter 7 case is filed, a certificate from the agency describing the services provided to the person must be filed with the court. A copy of any debt repayment plan prepared for the person by the agency must also be filed with the court. In emergency situations, the required credit counseling may be conducted after the case is filed.
5. How much is the filing fee in a Chapter 7 case and when must it be paid? The filing fee is $299.00 for either a single or a joint case. The filing fee is payable when the case is filed. However, if the person filing can show that his or her income is less than 150 percent of the official poverty line and that he or she is unable to pay the filing fee, the court can waive payment of the filing fee. If the person filing is unable to pay the entire filing fee when the case is filed, it may be paid in up to four installments, with the final installment due within 120 days. The period for payment may later be extended to 180 days by the court, if there is a valid reason for doing so. Unless payment is waived by the court, the entire filing fee must be paid or the case will be dismissed and no debts will be discharged.
6. May a husband and wife file jointly under Chapter 7? Yes. A husband and wife may file jointly under Chapter 7. If a joint Chapter 7 case is filed, only one set of bankruptcy forms is needed and only one filing fee is charged. However, both husband and wife must receive the required credit counseling before the case is filed and both must complete the required financial management course after the case is filed.
7. How does filing a Chapter 7 case affect a person's credit rating? It will usually worsen it, if that is possible. However, some financial institutions openly solicit business from persons who have recently filed under Chapter 7, apparently because it will be at least 8 years before they can file other Chapter 7 cases. If there are compelling reasons for filing a Chapter 7 case that are not within the person's control (such as an illness or injury), some credit rating agencies may take that into account in rating the person's credit after filing.
8. Will a person lose all of his or her property if he or she files a Chapter 7 case? Usually not. Certain property is exempt and may not be taken by creditors unless it is encumbered by a valid mortgage or lien. A person is usually allowed to retain his or her unencumbered exempt property in a Chapter 7 case. A person may also be allowed to retain certain encumbered exempt property. Encumbered property is property against which a creditor has a valid lien, mortgage or other security interest.
9. How is a person notified when his or her discharge has been granted? The person is usually notified by mail. Most courts send a form called "Discharge of Debtor" to the person filing and to all creditors. This form is a copy of the court order discharging the person from his or her dischargeable debts, and it serves as notice that the discharge has been granted and that creditors are forbidden from attempting to collect discharged debts. It is usually mailed about four months after a Chapter 7 case is filed.
10. How long does a Chapter 7 case last? A successful Chapter 7 case begins with the filing of the bankruptcy forms and ends with the closing of the case by the court. If there are no nonexempt assets for the trustee to collect, the case will most likely be closed shortly after the person filing receives his or her discharge, which is usually about four months after the case is filed. If there are nonexempt assets for the trustee to collect, the length of the case will depend upon how long it takes the trustee to collect the assets and perform his or her other duties in the case. Most Chapter 7 consumer cases with assets last about six months, but some last considerably longer.
Attention: This website contains general information about various areas of bankruptcy. It is highly recommended that persons with debtor/creditor problems seek the advice of an attorney. The information on this website is not intended to be legal advice and viewers should consult with an attorney. The question-and-answer portion of this website was reproduced with permission from The Attorney's Handbook on Consumer Bankruptcy and Chapter 13 by John H. Williamson (c) 2005.
CHAPTER 13 BANKRUPTCY
This restructuring plan allows individuals to retain assets, such as vehicles and homes, by creating and maintaining a reorganized payment schedule for the past-due debts, as well as maintaining the payments on the assets that are still owed monies. All your past-due debts are combined and a new payment schedule is set forth for the individual to follow over a 3-to-5-year period. This plan is often restructured for less than 10 cents on the dollar. Your new monthly repayment plan is determined by your current income and expenditures.
10 Frequently Asked Questions and Answers
1. What is a Chapter 13 bankruptcy case and how does it work? A Chapter 13 bankruptcy case is a proceeding under federal law in which the debtor seeks relief under Chapter 13 of the Bankruptcy Code. Chapter 13 is the chapter of the Bankruptcy Code which allows a person to repay all or a portion of his or her debts under the supervision and protection of the bankruptcy court. In a Chapter 13 case, the debtor must submit to the court a plan for the repayment of all or a portion of his or her debts. The plan must be approved by the court to become effective. If the court approves the debtor's plan, most creditors will be prohibited from collecting their claims from the debtor. The debtor must make regular payments to a person called the Chapter 13 trustee, who collects the money paid by the debtor and disburses it to creditors in the manner called for in the plan. Upon completion of the payments called for in the plan, the debtor is released from liability for the remainder of his or her dischargeable debts.
2. When is a Chapter 13 case preferable to a Chapter 7 case? Chapter 13 is usually preferable for a person who:
(1) wishes to repay all or most of his or her unsecured debts and has the income with which to do so within a reasonable time; (2) has valuable nonexempt property or has valuable exempt property securing debts, either of which would be lost in a Chapter 7 case; (3) is not eligible for a Chapter 7 discharge; (4) has one or more substantial debts that are dischargeable under Chapter 13 but not under Chapter 7; or (5) has sufficient assets with which to repay most debts but needs temporary relief from creditors in order to do so.
3. How does a Chapter 13 case differ from a private debt consolidation service? In a Chapter 13 case, the bankruptcy court can provide relief to the debtor that a private debt consolidation service cannot provide. For example, the court has the authority to prohibit creditors from attaching or foreclosing on the debtor's property, to force unsecured creditors to accept a Chapter 13 plan that pays only a portion of their claims, and to discharge a debtor from unpaid portions of debts. Private debt consolidation services have none of these powers.
4. What is a Chapter 13 plan? It is a written plan presented to the bankruptcy court by a debtor that states how much money or property the debtor will pay to the Chapter 13 trustee, how long the debtor’s payments to the Chapter 13 trustee will continue, how much will be paid to each of the debtor’s creditors, and certain other matters.
5. What debts may be paid under a Chapter 13 plan? Any debts whatsoever, whether they are secured or unsecured. Even debts that are nondischargeable, such as debts for student loans or child support, may be paid under a Chapter 13 plan.
6. Must all debts be paid in full under a Chapter 13 plan? No. While priority debts, such as debts for domestic support obligations and taxes, and fully secured debts must be paid in full under a Chapter 13 plan, only an amount that the debtor can reasonably afford must be paid on most debts. The unpaid balances of most debts that are not paid in full under a Chapter 13 plan are discharged upon the completion or termination of the plan.
7. How much of a debtor's income must be paid to the Chapter 13 trustee under a Chapter 13 plan? Usually all of the disposable income of the debtor and the debtor's spouse for a 3-or-5-year period must be paid to the Chapter 13 trustee. Disposable income is income received by the debtor and his or her spouse that is not deemed to be necessary for the support of the debtor and his or her dependents.
8. When must the debtor begin making payments to the Chapter 13 trustee and how are the payments made? The debtor must begin making payments to the Chapter 13 trustee within 30 days after the Chapter 13 case is filed with the court. The payments must be made regularly, usually on a weekly, bi-weekly, or monthly basis. If the debtor is employed, some courts require that the payments to be made directly to the Chapter 13 trustee by the debtor's employer.
9. How long does a Chapter 13 plan last? A Chapter 13 plan must last at least three years, unless all debts can be paid off in full in less time. A Chapter 13 plan cannot last for more than five years.
10. What fees are charged in a Chapter 13 case? There is a $274 filing fee charged when the case is filed, which may be paid in installments, if necessary. In addition, the Chapter 13 trustee charges a fee of 10 percent on all payments made by the debtor under the plan. These fees are in addition to the fee charged by the debtor's attorney. * The question-and-answer portion of thiswebsite was reproduced with permission from The Attorney's
Handbook on Consumer Bankruptcy and Chapter 13 by John H. Williamson (c) 2005.
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