The petition for bankruptcy is the initial document lodged with the court to initiate a case. This document contains comprehensive information regarding a debtor's assets, liabilities, income, and financial history. The debtor will be required to list all of their debt and asset information. It is crucial that the bankruptcy petition be accurately filled out, as incomplete or inaccurate information may result in a delay or dismissal of the case.
Chapter 7 bankruptcy is a form of bankruptcy that eliminates debts through asset liquidation or creditor discharge. Only those who pass a means test are eligible to petition for Chapter 7 bankruptcy protection. Through a Chapter 7 bankruptcy, a debtor's debts can be discharged with minimal out-of-pocket expenses, but the debts will be marked as ""satisfied through bankruptcy"" rather than ""repaid,"" resulting in greater credit damage.
The Means Test is used to determine if an individual is eligible for Chapter 7 bankruptcy. This criterion compared the debtor's income to the state's median income level. In order to be eligible for Chapter 7 bankruptcy, a debtor's income must be less than the state's median income. If the debtor's income exceeds the median income, he or she will not qualify for Chapter 7, but may qualify for Chapter 13.
The purpose of Chapter 13 bankruptcy is to reorganize a debtor's debts through the creation of a repayment plan. The repayment terms will be outlined in the Chapter 13 plan, and creditors will be required to adhere to this payment structure. As long as the debtor is making consistent payments towards the repayment plan, the debtor will be able to retain ownership of their assets. At the conclusion of a Chapter 13 plan, accounts are deemed paid and satisfied, resulting in less credit damage.
Unsecured debts are debts that are not secured by a collateral asset. Examples include credit cards, medical expenses, and utility expenditures. These debts are readily dischargeable in either chapter of bankruptcy.
Secured debts are debts that have collateral in the form of an asset. Examples include mortgage and auto loans. If the debtor defaults on the debt, the creditor retains the right to seize and liquidate the asset. Therefore, Chapter 13 is preferable, as it allows the debtor to retain possession of the asset while working to repay the debt.
Credit Counseling Course - is a course that provides information on debt education, sensible money management, using credit responsibly, and debt management alternatives. The course is necessary for the case to be dismissed. If the course is not completed by the deadline, a debtor's bankruptcy case may be dismissed.
The Bankruptcy Discharge signifies the conclusion and closure of a bankruptcy case. It signifies the conclusion of the case and absolves the debtor of any future liability for the debts.
Bankruptcy Dismissal is the rejection of a bankruptcy petition. The court may dismiss a case for nonpayment, failure to comply with the rules, failure to complete a required step, or if it suspects the debtor of engaging in fraudulent activity.
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