What is the Quickest Form of Bankruptcy?
Bankruptcy is a legal proceeding that is initiated when a person or business is unable to pay their debts. After declaring bankruptcy, your debts will either be erased, or a repayment plan will be established.
Chapter 7 bankruptcy, known as “liquidation bankruptcy,” is generally the quickest and most common form of bankruptcy. When you file for this type of bankruptcy, most of your unsecured debt including credit card debt, personal loans, and medical bills will be discharged by a bankruptcy court. However, certain forms of debt like student loans, alimony, tax debt, and child support will not be erased.
If your debt has piled up and you are considering filing for bankruptcy, get help from our bankruptcy lawyers at Young, Marr, Mallis & Associates by calling (609) 755-3115 for a free case review.
What is the Process for Filing Chapter 7 Bankruptcy?
Chapter 7 is typically the quickest form of bankruptcy that you can file for. Still, it involves filing a variety of documents and paying an assortment of fees. First, you will begin the process by filling out forms that detail records of income, assets, expenses, liabilities, and your overall financial standing.
The next step for declaring Chapter 7 bankruptcy will involve enrolling in a pre-bankruptcy credit counseling course. This course may cost between $20 and $100 and are usually offered by nonprofit credit counseling agencies. These agencies will examine your financial standing, weight your options for debt management, and determine if there are other potential solutions to your problems. If it is still determined that filing for bankruptcy is the best way forward, then you will take the forms that you filled out during the first step and file a petition for bankruptcy at a local bankruptcy court.
After filing a petition for bankruptcy, a court-appointed bankruptcy trustee will begin managing the process. They will arrange a meeting between you, your creditors, and your attorney if you have one. At this meeting you will likely have to answer questions from your creditors and the trustee regarding your bankruptcy finances and forms. Once your documents have been thoroughly reviewed, your eligibility for Chapter 7 bankruptcy will be determined.
If you are determined to be eligible for Chapter 7 bankruptcy, then the trustee will begin identifying property that can be sold to satisfy your debts. The proceeds from your sold assets will go to your creditors. However, certain items that are necessities of modern life are exempt from being collected. For example, motor vehicles, reasonably necessary clothing, and household appliances may be protected.
Approximately 3 to 6 months after filing your petition for Chapter 7 bankruptcy, your case will be discharged. This means that your eligible debts have been forgiven and your case will be closed. Still, the path to resolution after declaring bankruptcy can be complicated and frustrating. Support from our experienced Pennsylvania bankruptcy lawyers can be highly beneficial when navigating each step of the process.
Steps to Avoid When Preparing to File Chapter 7 Bankruptcy
There are certain actions you can take that may complicate the process for filing Chapter 7 bankruptcy, making you wait longer for your case to be resolved. First, you should avoid paying creditors in the months before filing bankruptcy. This may be confusing, but any unusual or large payments could be interpreted as “preferential transfers” that indicate one creditor gained unfair benefits over the others.
You should also avoid taking on any new debt while preparing to file for Chapter 7 bankruptcy. A new creditor may assert that you ran up your credit card balance or took a loan without the intention to pay it back. Legally, this can be interpreted as fraud. Furthermore, any unusual transactions you perform like transferring titles of cars or homes may also be considered acts of fraud.
Do not try to hide anything from your collectors when filling out your bankruptcy forms. You must be complete and truthful when disclosing your accounts, assets, debts, and other financial information. Some people may attempt to destroy certain documents related to their debt. However, actions such as this can be caught easily by trustees.
Finally, you should safeguard your retirement funds and keep them safe while considering filing for Chapter 7 bankruptcy. These funds are typically protected from bankruptcy proceedings, so you should not use them to pay your debt.
What Are the Other Forms of Bankruptcy?
While Chapter 7 bankruptcy is generally the quickest and most common form of bankruptcy, there are other forms that may be right for you depending on your situation. For instance, while Chapter 7 bankruptcy forgives your debts, Chapter 13 bankruptcy will reorganize it. When you file for Chapter 13 bankruptcy, the court will approve a monthly payment plan that allows you to pay back a portion of your debt over a certain period of time. Unlike Chapter 7, this form of bankruptcy allows for you to keep your assets and catch up on debt that has not gotten completely out of hand.
Chapter 11 bankruptcy is most often filed by businesses. When businesses file for Chapter 11 bankruptcy, they will come up with a plan for how they can continue operating while paying off their debt. This plan must be approved by both creditors and the courts.
Chapter 12 bankruptcy applies specifically to family farmers and fisherman. This form of bankruptcy is slightly more forgiving than Chapter 13 bankruptcy and allows for higher debt limits. It allows debtors to potentially avoid selling all their belongings and refrain from foreclosing on their properties.
Chapter 15 bankruptcy deals with international bankruptcy issues. It allows for foreign debtors to access the U.S. bankruptcy courts.
Finally, Chapter 9 bankruptcy is another form of bankruptcy that establishes a repayment plan for debtors. This form specifically allows for towns, cities, and school districts to reorganize their debt and pay back what is owed.
If You Think You Need to Declare Bankruptcy, Call Our Law Firm for Help
Seek guidance from our experienced Philadelphia bankruptcy attorneys at Young, Marr, Mallis & Associates by dialing (609) 755-3115 for a free case assessment.