Bankruptcy is a procedure brought in federal court. About 6 months after your case is filed, the bankruptcy court in the area where you reside will issue an Order declaring all your unsecured debts discharged. That means your unsecured creditors which you had before you filed bankruptcy will then forever be barred from contacting you ever again to collect on a debt.

A chapter 7 bankruptcy is commenced by filing a petition and 30 or more pages of additional paperwork detailing your financial situation. Immediately upon filing, your creditors are prohibited from bothering you or attempting to collect on the debts. A trustee is appointed by the court to review your filing and to recommend to the court that your debts be discharged, that is, wiped out. About 4 to 5 weeks after filing, you have to appear for a trustee meeting which is mostly a formality.

This is often called a "straight" bankruptcy. Debtors usually receive their discharge soon after they file and they are allowed to keep any money they earn after they file. In Chapter 7, debtors are required to give up "non-exempt" property and laws in New Hampshire and Massachusetts have different requirements. Some debts will be dischargeable while others will not.

Reaffirm the obligation with the secured creditor [both the debtor and creditor must agree to the reaffirmation]. Retain and keep current with creditor [a secured creditor with personal property for collateral may still be permitted to repossess the property should the debtor not reaffirm]. Redeem the property by paying the creditor the value of the collateral [only available with tangible personal property used for personal, family or household use].

Each case is different. First, there must have been a Notice of Possible Dividends issued in the case to which you timely filed a proof of claim. Several months after the deadline to file claims has passed you may contact the Chapter 7 trustee and ask when the trustee anticipates making payments to creditors. Remember that in more complex cases or cases involving litigation, there may be many months of delay before payments may be made to creditors.

A debtor may retain and redeem certain secured personal and household property, such as household furniture, appliances and goods, wearing apparel, and tools of trade, without payment to the secured creditor, if the property is exempt and if the mortgage or lien against the property was not incurred for the purpose of financing the purchase of the property.

The first court appearance is for a hearing called the "meeting of creditor." This hearing usually takes place about a month after the case is filed. At this hearing the debtor is put under oath and questioned about his or her debts and assets by the hearing officer or trustee. In most chapter 7 consumer cases no creditors appear in court; but any creditor that does appear is usually allowed to question the debtor.

If the discharge in the Chapter 7 case eliminates the debtor's personal liability for the tax year or years for which there is a lien, the lien survives only as a charge on the equity in the property that the debtor owned at the beginning of the case.

Most debtors file for a complete discharge under Chapter 7. Chapter 13 is the repayment chapter. Some debtors will file a Chapter 13 in an attempt to save their home, by incorporating past due payments into the 5 year repayment. But beware, most of these plans fail with the debtors converting to a Chapter 7 anyway. Unless you have a good reason or are not eligible, most debtors should file Iowa bankruptcy under Chapter 7.

Chapter 7 provides for a complete discharge. Under Chapter 13, you pay back part of your debt over 5 years. With Chapter 13, you can repay past due home or car loans over time. But beware; many clients delay the inevitable by filing a Chapter 13, making some payments and then failing and having to file a Chapter 7 anyway. Click here for more information.

Filing a chapter 13 bankruptcy has several advantages over a chapter 7 liquidation. A chapter 13 bankruptcy allows you to discharge a few more types of debts than does a chapter 7 bankruptcy. If you own an unincorporated business and your business is not a partnership, you can continue to own and operate the business under a chapter 13 plan. Under a chapter 7 liquidation, a bankruptcy court may order that your business or its assets be sold.

The types of assets which you are allowed to keep are defined in the South Carolina Code. The Code puts certain dollar limits on the value of property which you can keep (called "exemptions"). If an asset is worth more than the amount listed, then it is subject to be sold by the Trustee, but that does not necessarily mean that it would be sold.

Yes. The interplay of the tax codes and the Bankruptcy Code is complex, but in somewhat oversimplified terms, if a tax return creating a tax debt was filed more than three years before the filing of the Chapter 7 petition, the tax debt can be discharged. Stated another way, if a Chapter 7 petition is filed within three years of the filing of the tax return creating the tax debt, the tax debt cannot be discharged, and the Debtor will still owe the taxing entity when the Chapter 7 is completed.

If you are able to make any meaningful payments (even a relatively small percentage of payments) to your unsecured creditors (in addition to your normal living expenses), you will probably be required to file a chapter 13 bankruptcy instead of a chapter 7 bankruptcy.