When you are investigating personal bankruptcy and whether it is right for you, you will run across all kinds of new words and legal principles. Personal bankruptcy is a complex location of law and one that lots of lawyers do not comprehend. This is a fundamental guide to bankruptcy and will provide you the background needed to discuss bankruptcy with an attorney.
Specifying Personal Bankruptcy and the Trustee System
Insolvency is a debt relief procedure that is developed by federal law. Bankruptcy is controlled by the United States Insolvency Code and the Federal Rules of Personal Bankruptcy Treatment. Bankruptcy protects debtors from their financial institutions, while also guaranteeing that creditor's rights are safeguarded. In most cases, people will be eliminated of all of their financial obligations without making any more payments.
Personal bankruptcy is the only financial obligation relief program that your financial institutions are needed to follow. If you do debt consolidation or credit therapy, you could invest thousands of dollars over months or years, and in the end, lenders might just ignore it. Creditors can't overlook insolvency. As soon as you file insolvency, your lenders need to stop harassing you. Once you get your bankruptcy discharge, your financial institutions can never try to gather the released financial obligations from you again.
If you are not acquainted with personal bankruptcy, the trustee system can be confusing. There are 2 kinds of trustees: 1) The United States Trustee, and 2) the panel trustees.
The United States Trustee and their attorneys are employees of the United States Department of Justice. They oversee the entire insolvency system and make certain that cases are administered according to the law. The personal bankruptcy judge has the last word in a case, however the United States Trustee does work of managing all cases in bankruptcy. If the United States Trustee has a problem with a case, they file a movement with the court. You have the right to respond to the motion and object. Motion practice is relatively tough and you must contact your insolvency attorney about any motions in your case.
The United States Trustee appoints a panel of private lawyers to serve as "panel trustees" in chapter 7 and chapter 13 cases. The panel trustees are called either the chapter 7 trustee or the chapter 13 trustee. The United States Trustee delegates the running of specific cases to chapter 7 and chapter 13 trustees. This panel trustee represents the interests of all of your unsecured financial institutions. These trustees are arbitrarily appointed to cases and are paid a flat fee plus a part of the plan payment in chapter 13 or a portion of any property recovered in chapter 7. This is the trustee that you will see at the 341 meetings.
The 341 meetings are required of all debtors in personal bankruptcy. It is formally called the very first meeting of financial institutions. 2 things to remember about it: 1) it's the only meeting of financial institutions, 2) typically your financial institutions never ever appear. The 341 meetings are run by the panel trustee. You will be required to bring 2 forms of recognition: 1) an image ID, and 2) evidence of your social security number. The trustee will ask you a series of simple questions like, "with your attorney's support did you sign the bankruptcy petition." Your personal bankruptcy attorney must be able to predict if the trustee will have any concerns about your case or if the trustee will ask any specific questions. The judge is not present at the 341 meetings. You are put under oath and it is very important to tell the truth. It is constantly much better, to tell the truth than it is to lie or even to provide evasive answers.
Advantages of Insolvency: The Automatic Stay and the Discharge
Personal bankruptcy stops creditor harassment. The minute that you submit personal bankruptcy, you get something that is called the automatic stay. The automatic stay stops all efforts to collect any of the financial obligations that are in your personal bankruptcy. This consists of telephone call, letters, suits, garnishments, A creditor has to ask the court's permission and show good cause if they wish to keep collecting a financial obligation from you. Unsecured creditors like credit card companies, debt collectors and medical billings can not get relief from stay and can not keep collecting from you. If a lender violates the automated stay, you may be entitled to damages. Further, submitting personal bankruptcy stops a garnishment.
In addition, bankruptcy stops foreclosures. Even if you wish to eliminate your home, personal bankruptcy can purchase you some extra time. If you have more than one mortgage or if your house is underwater, insolvency prevents a shortage judgment versus you.
Insolvency likewise supplies a way for you to save your home. Chapter 13 allows you to get present on your house and save it from foreclosure. If you think that there are issues with your home mortgage or if you wish to eliminate a second or third home loan, chapter 13 permits you to do that as well.
The bankruptcy discharge is an order from the United States Bankruptcy Court that states you are no longer required to pay any of the financial obligations that you take into insolvency which your personal bankruptcy financial institutions can not attempt to collect those financial obligations ever once again. It is gone into at the end of your case.
For most people, all of their financial obligations are discharged in personal bankruptcy. There are some exceptions for things like back kid support/alimony, particular back taxes, trainee loans, criminal charges, speeding tickets, and debts incurred through fraud. These exceptions to the discharge are taken a look at on a case by case basis. Your personal bankruptcy attorney can inform you more about it, after the initial consultation. You shouldn't worry about it however, many people get full discharges in bankruptcy.
Summing Everything Up
This has been a quick overview of the insolvency procedure. Ideally, you have a better understanding of what personal bankruptcy is and how it works. This is not meant as a guide for people submitting on their own. Bankruptcy is extremely made complex, and it is constantly a good Century Law Inc bbb idea to work with an experienced bankruptcy attorney.