Chapter 7
First, bankruptcy begins when the debtor files a petition with a court that has jurisdiction. The debtor must also file schedules listing assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of all executory contracts and unexpired leases. A chapter 7 case usually concludes 60 days after the meeting of creditors unless someone objects to the discharge. All claims are allowed claims unless there is an objection. A trustee, creditor or U.S. Trustee can object to a chapter 7 discharge. All objections must be filed within 60 days after the first date set for the meeting of creditors, which is governed by section 341. However, the court may grant a time extension to file objections for cause.
In a chapter 7, a trustee gathers and sells all of the debtor's nonexempt assets, using the proceeds to pay off debts to creditors once the debtor files a petition for bankruptcy. The trustee also determines whether certain property is exempt or nonexempt under bankruptcy law and state law. The debtor must give the trustee tax documents such as recent tax returns and transcripts, and previous unfiled tax returns. Additionally, individual debtors with substantial consumer debt must file a certificate for credit counseling, wages from employers received 60 days before filing, a statement of current monthly income and expenses, and a record of interest for federal or state qualified education or tuition accounts. Spouses may file jointly or individually. If both spouses choose to file jointly, each must meet all filing requirements as an individual debtor.
Chapter 13
Like Chapter 7, the debtor initiates a bankruptcy proceeding by filing a petition with the court where the debtor is domiciled or residing. The debtor must also file schedules listing assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of all executory contracts and unexpired leases. Like a chapter 7 debtor, the debtor must provide tax documents such as recent tax returns and transcripts, and previous unfiled tax returns to the chapter 13 trustee. The debtor must submit a list of all creditors and the amounts and nature of their claims, the source, amount and frequency of the debtor's income, a list of all property owned by the debtor, and a list of the debtor's monthly expenses in detail. This information must provided by each individual, regardless of whether spouses file jointly or not.
After the petition is filed, a trustee is appointed by the court to administer the case. The trustee collects payments and distributes to the creditors. At filing, the automatic stay prevents contact with creditors until the bankruptcy proceedings conclude. Chapter 13 provides a special protection for c-debtors where a creditor may not collect a consumer debt from any co-debtor. The debtor should make overdue payments current. If the debtor's home is in foreclosure and foreclosure sale concludes, the debtor may not be able to keep the home. Another way the debtor could lose the home is failure to maintain regular mortgage payments after the filing. You can get legal help online if you have questions about filing for bankruptcy.
The trustee then holds a meeting of creditors between 21 and 50 days after filing. The debtor attends this meeting to answer questions about finances and the proposed plan. In a joint petition, both spouses must be present. Within 90 days of the first date set for the meeting of creditors, unsecured creditors must file claims with the court or else the unsecured creditors cannot participate in distribution of the estate. A governmental has 180 days to file a proof of claim. After the meeting, the debtor, trustee and creditors will meet in a hearing to discuss the repayment plan.
Chapter 11
In a chapter 11 case, the debtor files a petition with the court where the debtor is domiciled or residing. The petition may be voluntary or involuntary, when filed by creditors. The debtor must also file schedules listing assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of all executory contracts and unexpired leases. The debtor must provide tax documents such as recent tax returns and transcripts, and previous unfiled tax returns to the court.
To file a voluntary petition, the debtor must provide debtor's name(s), social security number or tax identification number, residence, location of principal assets (if a business), the debtor's plan or intention to file a plan, and a request for relief. At filing, the debtor becomes the debtor in possession and assumes the same duties of a trustee until the reorganization plan is confirmed. If no plan is confirmed, usually within 180 days, the case will be either dismissed, converted to a chapter 7 case, or a chapter 11 trustee is appointed.
From filing, the debtor has the exclusive right to propose a reorganization plan during the exclusivity period unless a trustee gets appointed. After the exclusivity period, creditors and any interested parties may submit their proposed plan. The plan divides creditors into different classes where all creditors within a class must be substantially similar and treated equally. Only affected or impaired creditors may vote on the plan, which requires that the class of creditors approve of the plan. Before the creditors vote, full disclosure must be provided to the creditors. Corporations and business entities receive discharge at confirmation. However, individuals receive discharge when all payments are made under the plan.
If you need help with bankruptcy, you can get free legal advice online.
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