While the information presented below is as accurate as possible as of the date of publication, it should not be cited or relied upon as legal authority. It is highly recommended that legal advice be obtained from a bankruptcy attorney or legal association. For filing requirements, please refer to the United States Bankruptcy Code (Title 11, United States Code), the Federal Rules of Civil and Bankruptcy Procedure, and the Local Rules for the United States District and Bankruptcy Courts for the Eastern District of Wisconsin.
- How do I file?
- I've filed, what's next?
- What is this form?
- Discharges, Dismissals and Conversions
- What to expect from Creditors
- Adversary Proceedings
How do I know if filing bankruptcy is right for me?
While it is possible to file for bankruptcy pro se (“on your own”) it is not a step that should be taken without serious consideration. Properly filing for bankruptcy takes careful preparation and knowledge of the law. Individuals who fail to comply with the requirements of the law or do not file all required paperwork and supporting documents risk dismissal of their cases. It is always better for an individual to speak with and retain an attorney familiar with bankruptcy law who can guide them through the process. There is no minimum amount of debt necessary in order to file for bankruptcy; however, the amount should be high enough that it is beyond the debtor’s ability to repay it in the foreseeable future, or the debtor is about to suffer the loss of essential income or property to a creditor due to the collection of an outstanding debt. Which type of bankruptcy is best for individuals depends on their own circumstances, including their income and the type and amount of property they own. Filing bankruptcy is a complicated legal process and may not be the right course of action for all debtors. Before you file a bankruptcy petition, you need to make sure that filing a petition is the best thing for you to do.
Who can start a bankruptcy?
Any person, and almost any partnership, corporation, or business trust may file a bankruptcy petition. A business that is not a partnership, corporation, limited liability company or business trust, cannot file a separate bankruptcy petition on its own, but must be filed as an individual bankruptcy under the name(s) of the owner(s). Only a family farmer or family fisherman may file a chapter 12 petition. Only an individual with regular income may file a chapter 13 petition.
Why are there different chapters for individual filers?
There are differences in the way debt gets handled in bankruptcy, often depending on which chapter the debtor files under. Although an individual’s case may be filed under chapters 12 and 11, the majority of personal bankruptcies are filed under chapter 7 or chapter 13. Chapter 13 allows debtors with regular income to repay debts over three to five years. It stops the collection process and allows a debtor who is behind in mortgage or car payments to catch up those payments over time. Debtors without regular income must file chapter 7, which involves no payment plan. Chapter 7 does not stop foreclosure or repossession, so creditors can still take the homes and cars of debtors behind in payments. Generally, people file chapter 7 bankruptcy if they have a large amount of unsecured debt such as credit card debt or medical expenses that they are no longer able to pay.
What does it cost to file for bankruptcy?
See the Miscellaneous Fee Schedule for the current list of Bankruptcy Court filing fees. The debtor must normally pay all of the required fees at the time he or she files a bankruptcy petition. To pay fees in installments, a fully completed Application To Pay Filing Fee In Installments must be filed with the petition. If an application for payment of fees in installments is approved, the debtor may not pay an attorney or petition preparer for services rendered until all of the filing fees are paid. The Court also has the discretion to waive the filing fee for an individual chapter 7 debtor if his or her income is less than 150% of the official poverty line (as defined by the federal government) applicable to a family of the size involved, and the debtor is unable to pay that fee in installments. If the debtor feels that a fee waiver is warranted, the debtor must file with his or her petition a fully completed Application for Waiver of the Chapter 7 Filing Fee. If the judge denies the application for a fee waiver, he or she will normally enter an order requiring the payment of the filing fee in installments. In that case, failure to make the installment payments will result in a dismissal of the bankruptcy case.
How often can a debtor file bankruptcy?
If a chapter 7 or 11 discharge is entered by the Court, the debtor is prohibited from being granted another discharge in a subsequent chapter 7 case filed within eight years of the filing of the first case. If a chapter 7, 11, or 12 discharge is entered by the Court, the debtor is prohibited from being granted another discharge in a subsequent chapter 13 case filed within four years of the filing of the first case. If a chapter 13 discharge is entered by the Court, the debtor is prohibited from being granted a discharge in a subsequent chapter 13 case filed within two years of the filing of the first case. If a chapter 12 or 13 discharge is entered by the Court, the debtor is prohibited from being granted a discharge in a subsequent chapter 7 case filed within six years of the filing of the first case.
What does “pro se” mean?
“Pro se” is a Latin term, meaning “for oneself” or “on one’s own behalf.” A person who represents himself in court alone without the help of a lawyer is said to appear pro se.
Where can I get legal advice?
Only an attorney is authorized to give you legal advice regarding a bankruptcy case or proceeding. So-called “petition preparers” are not authorized to give debtors legal advice. Their role is strictly that of a typing service transcribing for a minimal fee the information a client provides. Volunteer attorneys provide assistance to chapter 7 debtors, or people considering filing chapter 7 bankruptcy, who wish to proceed pro se (without an attorney to represent them). The Help Desk is open Thursdays, from 9:00 a.m. to 10:30 a.m., in Room 153 of the U.S. Courthouse.
Will filing bankruptcy affect the debtor’s credit?
The fact that someone has filed a bankruptcy will appear on their credit record for ten years. Credit reporting companies are businesses that provide information about a consumer’s credit history. The customers of credit reporting companies include banks, loan companies, and retailers that extend credit. Credit reporting companies may also provide investigative reports on persons applying for a job or insurance to an employer or insurance company.
What is a bankruptcy discharge?
The discharge is a permanent injunction which prohibits any attempt to collect from the debtor all debts that have been discharged, except for debts not discharged by the Court. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor.
When does the discharge occur?
The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 (liquidation) case, for example, the Court usually grants the discharge promptly after expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the § 341 meeting).
How do I file?
Are corporations allowed to proceed pro se (without an attorney)?
Corporations, limited liability companies, and partnerships generally may not file papers in a bankruptcy case pro se, and with certain exceptions listed below, will need to obtain representation by an attorney to file any papers. Any creditor (including a corporation, limited liability company or partnership through a non-attorney representative such as an officer, member or employee) may file pro se any documents that would not constitute the practice of law, including a request to receive all notices, a proof of claim, a withdrawal of a proof of claim, a notice of transfer of claim other than for security, a request to recover unclaimed funds, a reaffirmation agreement, and a ballot for voting on a proposed chapter 11 plan.
What is the automatic stay?
The “automatic stay” in most circumstances stops the commencement or continuation of most actions or proceedings that a creditor might take or be in the process of taking to collect money or property from the debtor.
Can filing bankruptcy stop bill collectors from calling?
Yes. The automatic stay prevents bill collectors from taking any action to collect debts.
How long after filing bankruptcy will the creditors stop calling?
Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After the debtor files the bankruptcy petition, the Clerk of Court mails a notice to all the creditors contained in the creditor matrix. This usually takes a couple of weeks. Creditors will also stop calling if the debtor informs them about the bankruptcy petition, and supplies them with the case number.
Can the filing of bankruptcy stop an eviction action?
Whether or not the automatic stay is applicable to eviction proceedings depends upon the facts of the case. The following exceptions to the automatic stay are relevant to landlords of residential property: Exception #1: If eviction action was started before the filing of bankruptcy and was due to failure to pay rent. Exception # 2: If the eviction action is due to behavior that endangers the property (such as illegal drug use, etc).
What property can a debtor keep after filing bankruptcy?
In a chapter 7 case, the debtor can keep all the property which is exempt from the claims of creditors. In determining whether property is exempt, the debtor must keep a few things in mind. The value of property is not the amount that the debtor paid for it, but what it is worth now. Generally the trustee is interested in the resale value of the property so for most personal effects this is the rummage sale value of the property. Homeowners who end up filing bankruptcy often do not have enough equity in their home to benefit creditors, either because they have taken out a second mortgage or the home’s value has fallen, or both. In such cases, the trustee handling the case can decide not to liquidate the home. However, if mortgage payments are not made, the home may still be foreclosed after the automatic stay is no longer in effect.
Can debtors who file for personal bankruptcy lose their home or car?
Sometimes. While it is possible to lose such property in a bankruptcy, in most cases debtors will not lose their home or car. However, a debtor must continue making payments on any secured property that he or she wishes to retain post-bankruptcy. Due to the potential risk of losing secured property, it is important to determine whether such a risk exists before the bankruptcy case is filed, since a chapter 7 case cannot be withdrawn without the permission of the Court after it has been filed. Depending on a debtor’s circumstances, the debtor may have to file a chapter 13 case in order to save the property.
Does an individual who files for bankruptcy lose future income and property?
No. Many people believe that they cannot own anything for a long time after filing for bankruptcy. This is not true. A debtor can keep exempt property and anything obtained after filing. The major exception is if the debtor becomes entitled to receive an inheritance, a property settlement, or life insurance benefits within 180 days (6 months) after filing a bankruptcy. That money or property may have to be turned over to the trustee for payment to the creditors.
What is credit counseling and financial counseling?
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individual debtors must undergo credit counseling before filing for bankruptcy. In order to receive a discharge of debt, an individual debtor who files for bankruptcy must complete an instructional course in personal financial management after filing for bankruptcy. Special Warning to Debtors: If you have not completed such credit counseling before you file your petition (and no earlier than 180 days before you file your petition) and you do not meet the requirements for an extension to complete the credit counseling after filing (or for being exempted from being required to obtain such a credit counseling), your case will be dismissed and you will not receive a discharge of your debts. Even if you file another case within one year after your first case was dismissed, your protection under the Bankruptcy Code’s automatic stay from your creditors may be limited to 30 days after filing the new case.
How does the debtor obtain credit counseling and financial counseling?
To locate an approved agency that can provide pre-bankruptcy credit counseling, go to the U.S. Trustee website. Click on the “Credit Counseling & Debtor Education” link at www.usdoj.gov/ust. You may conduct the counseling on a computer, by telephone or in person. If you do not have a computer, check at the Clerk’s intake counter regarding the availability of a computer you may use for the purpose of obtaining credit counseling. In addition, after filing for bankruptcy, you must complete a personal financial management course from an approved personal financial management instruction provider. To locate an approved provider, go to the U.S. Trustee website. After completing the instructional course, you must submit to the Clerk (1) a “Certification of Completion of Instructional Course Concerning Personal Financial Management” and (2) a copy of the certificate from the provider, within 60 days of the First Meeting of Creditors or your case may be closed without a discharge.
What is the effect of bankruptcy on co-signers?
If someone has co-signed a loan with a debtor and the debtor files for bankruptcy, the co-signer will likely still have to pay the debt. Any co-signer on a debt will continue to be liable even if the debtor has filed for a chapter 7 bankruptcy, unless the co-signer also files for similar protection. If the debtor filing a chapter 13 petition agrees to pay in full a debt with a co-signer, the co-signer cannot be pursued for the debt as long as the debtor remains in chapter 13 and continues to make payments. The debtor should list the co-signer as a creditor on the bankruptcy petition.
Can a married debtor file without the other spouse?
Yes. A bankruptcy filing by one spouse does not bring the other spouse into bankruptcy. Neither does the bankruptcy of a spouse give the non filing spouse the full protection of the automatic stay or the bankruptcy discharge.
Will the debtor’s utility services be affected?
Public utilities, such as the electric company, cannot refuse or cut off service because a debtor has filed for bankruptcy. However, the utility can require a deposit for future service and the debtor does have to pay bills which arise after the bankruptcy petition is filed. In the event the debtor feels he or she cannot pay the requested deposit, it is the debtor’s responsibility to seek an order from the Court reducing the amount of the deposit. The Court will then schedule a hearing to determine the appropriate amount of the utility deposit.
Will the debtor have to go to court?
Occasionally, if a creditor or the trustee files a motion or an adversary action or if the debtor chooses to dispute a debt, the debtor may have to appear before a judge at a hearing. If the debtor needs to go to court, the debtor will receive notice of the hearing date and time from the Court and/or from their attorney.
Does the debtor need to list all creditors?
Under Bankruptcy Rule 1007(a), the list of creditors should be a list of all creditors, as well as the other entities required to be listed. The debtor is not permitted to omit creditors from the list because the debtor does not want those creditors affected by the bankruptcy case or does not want them to know about the case or for any other reason. The Bankruptcy Code defines “creditor” as any entity that has a claim against the debtor, and “claim” as a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, secured or unsecured.
Can I erase my student loans by filing bankruptcy?
Generally, student loans are not discharged in bankruptcy. You will remain responsible for these debts. Privately funded and government-funded or guaranteed loans are treated the same under the Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005.
I've filed, what's next?
How do I obtain case information?
Bankruptcy case and adversary proceeding files are public records and available for viewing in the Bankruptcy Clerk’s Office during normal business hours. Authorized account holders may access PACER (Public Access to Court Electronic Records) via the internet. Non-account holders may access PACER at the computer terminals provided in the Clerk’s Office. Basic case information may be obtained through VCIS (Voice Case Information Service). This free service requires a touch tone telephone. To connect, dial (866) 222-8029 (toll free).
How do I obtain copies of case documents, including certified copies?
Requests for copies of documents, including certified copies, can be made to the Clerk's Office. The cost for copy certification is $9.00. Copies of documents are $0.50 per page. Please see the Miscellaneous Fee Schedule for more fees related to records search and retrieval.
What is a trustee?
The trustee in a bankruptcy case is the representative of the bankruptcy estate. They are responsible for determining assets, if any exist, and disbursing those to your different creditors. Chapter 13 trustees disburse the payments made through the repayment plan.
What is a bankruptcy estate?
A bankruptcy “estate” includes all legal or equitable interests of the debtor in property, wherever located, as of the commencement of the case. It also includes any property in which the debtor has an ownership interest that is recovered by the trustee if it was merely out of the possession of the debtor. An attorney should be consulted if there is any question as to whether specific property will be included in the bankruptcy “estate” and the exemptions available to the debtor which may exclude certain property.
What happens after a debtor files bankruptcy?
Upon filing the original petition with the Clerk’s Office, the “Automatic Stay” immediately takes effect and prohibits creditors from taking any collection action against the debtor. The Court issues a notice to all creditors advising them of the filing of the bankruptcy. At the 341 meeting of creditors, the debtor is required to respond, under oath, to questions from the case trustee and to any questions that creditors may have relating to the financial condition of the debtor and the debtor’s assets. Attending this meeting is mandatory for the debtor but creditors need not attend. The Court will issue the discharge roughly 60 days after the meeting if there are no objections.
What is the section 341 meeting of creditors?
In most bankruptcy cases, the debtor only has to go to a proceeding called the “meeting of creditors” or a “341 meeting” to meet with the bankruptcy trustee and any creditor who chooses to come. This meeting will take place about 30 or 40 days after the bankruptcy filing. The trustee is not a judge but an individual appointed by the United States Trustee to oversee the case. Most of the time, this meeting will be a short and simple procedure where the debtor is asked questions about his or her bankruptcy forms and financial situation. The case may be dismissed if the debtor fails to appear at, and complete, this meeting.
What should the debtor bring to the section 341 meeting of creditors?
The debtor (both spouses in a joint case) must be present at the meeting, with photo identification and proof of social security number, to be questioned under oath by the trustee and by creditors.
What is this form?
How do exemptions work?
The purpose of a bankruptcy is to give debtors a financial “fresh start” and not to remove all of their property. Therefore, the law allows every debtor to protect certain property from their creditors, even if the value of the assets is greater than his or her debts. The bankruptcy law specifies that various items of personal and real property belonging to a debtor cannot be taken by creditors in order to satisfy their claims. Such items are “exempt” (protected) property.
What are the Exemptions under the Bankruptcy Code?
The following exemptions are available under the Bankruptcy Code: Real property (up to certain limits), motor vehicle, animals, crops, clothing, appliances, household goods, jewelry, health aids, wrongful death recovery, personal injury recovery, lost earnings, retirement accounts, crime victim compensation, alimony, child support, life insurance, disability and unemployment benefits. For additional information regarding each exemption, as well as the maximum value allowed for each exemption, please refer to 11 U.S.C. § 522.
What are Wisconsin’s Exemptions?
The following exemptions are available to Wisconsin debtors under Wisconsin law: Bank Deposits, cemeteries and burial funds, crime victims’ compensation, fraternal benefit society benefits, homestead or residential property, insurance benefits, benefits paid by the public employee trust fund, motor vehicles, partnership property, pensions and retirement benefits, personal property, prisoner property, trade implements, unemployment compensation, veterans’ benefits, wages, workers’ compensation. Please reference Wisconsin Statute for definitions of each.
What are the Exemptions under Nonbankruptcy Federal Law?
Foreign service retirement and disability payments, Social Security payments, injury or death compensation payments from war risk hazards, wages of fishermen, seamen, and apprentices, civil service retirement benefits, Longshoremen’s & Harbor Worker’s Comp. Act death & dis. benefits, Railroad Retirement Act annuities and pensions, veterans benefits, special pensions of Congressional Medal of Honor winners, railroad unemployment insurance benefits, government employees’ disability or death benefits for work-related injuries, military survivors’ benefits, military annuities, military pension benefits, insurance benefits Servicemembers’ Life Ins./Veterans’ Life Ins., CIA Retirement & Disability Sys. payments, federally insured/guaranteed student loans, grants, work assist.
What is the difference between secured, unsecured, priority and administrative debt?
Generally the following definitions will apply, but if you have any questions about the classification of your debts, you should seek competent legal advice. Secured debt is a debt that is backed by real or personal property. For example, most homes are burdened by a “secured debt.” If a debtor simply promises to pay someone a sum of money at a particular time, and the debtor has not pledged any real or personal property to collateralize the debt, the debt is unsecured. For example, most debts for services and most credit card debts are “unsecured.” A debt entitled to priority payment ahead of most other debts in a bankruptcy case is a “priority” debt. A listing of priority debts is given, in general terms, in § 507 of the Bankruptcy Code. Examples of priority debts are some taxes, wage claims of employees, and domestic support obligations. Administrative Debt. This is also a priority debt and is one created when someone provides goods or services to a bankruptcy estate. The best example of an administrative debt is the fees generated by attorneys and other professionals whose employment has been authorized by the Court to represent the bankruptcy estate.
What is the Chapter 7 “Means Test”?
As part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 which became effective on October 17, 2005, a “means test” has been instituted to determine whether or not a debtor is entitled to a chapter 7 discharge, or whether such debtor must convert the case to another chapter of the Bankruptcy Code. The basic purpose of the means test is to compare monthly income and expenses to determine whether or not a chapter 7 discharge would constitute an “abuse” of the provisions related to chapter 7 in the Bankruptcy Code.
What is a reaffirmation agreement?
A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. All reaffirmation agreements must be filed in compliance with 11 U.S.C. § 524, with Official Form 427 attached as a cover sheet. Reaffirmation agreements are strictly voluntary. They are not required by the Bankruptcy Code or other state or federal law. If the debtor reaffirms a debt, does not rescind the agreement, and fails to make the payments as agreed, the creditor can take action against the debtor to recover any property that was given as security for the debt, and the debtor may remain personally liable for any remaining debt after the collateral is sold.
What is a redemption?
Redemption allows an individual debtor (not a partnership or a corporation) to keep tangible, personal property intended primarily for personal, family, or household use by paying the holder of a lien on the property the amount of the allowed secured claim on the property, which typically means the replacement value of the property (the price a retail merchant would charge for property of such kind, considering the age and condition of the property at the time the value is determined) without deduction for costs of sale or marketing.
Discharges, Dismissals and Conversions
May the debtor pay a discharged debt after the bankruptcy case has been concluded?
A debtor who has received a discharge may voluntarily repay any discharged debt. A debtor may repay a discharged debt even though it can no longer be legally enforced. Sometimes a debtor agrees to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtor’s reputation is important, such as a family doctor.
What is the difference between denial of discharge and denial of the dischargeability of an individual debt?
A discharge can be denied by the Court for either all debts (denial of debtor’s discharge) or for one particular debt (denial of the dischargeability of a particular debt). For a discharge to be denied as to all debts, either the debtor must simply not be entitled to a discharge at all by law, or else someone must file an Adversary Complaint (Bankruptcy Court’s version of a civil lawsuit) with the Court. To deny the dischargeability of a particular debt, either the debt must be non-dischargeable by law, or someone must file an Adversary Complaint with the Court seeking to deny the dischargeability of that debt.
What is a hardship discharge?
If an individual debtor in a chapter 11, 12, or 13 case is not able to maintain plan payments, it is possible to file a motion for a “hardship” discharge so that the case can be completed. As a practical matter, the relief obtained by the debtor is quite similar to that obtained by converting the case to one under chapter 7 in that the debts which are not dischargeable in chapter 7 are not discharged if the Court approves a hardship discharge in the chapter 11, 12, or 13 case.
What does it mean if a case is dismissed?
A Dismissal Order ends the case. Upon dismissal, the “automatic stay” ends and creditors may start to collect debts. An Order of Dismissal does not free the debtor from any debt. Often, a case is dismissed when the debtor fails to do something he/she must do: show up for the creditors’ meeting, pay the filing fees, answer the trustee’s questions honestly, produce books and records the trustee requests, file required documents, or when the dismissal is in the best interest of the creditors.
Can I voluntarily dismiss my Chapter 7 Bankruptcy?
A debtor’s right to dismiss under Chapter 7 is not absolute and subject to the discretion of the court. The debtor must file a motion to dismiss with the court and serve notice of that motion to all creditors and interested parties. The court will then schedule a hearing to make the determination. It is strongly suggested that you consult an attorney to assist you in determining the best course of action.
Can I voluntarily dismiss my Chapter 13 Bankruptcy?
If your case has not been previously converted, you may file a motion to dismiss your case under Chapter 13. You are not required to send notice of this motion to interested parties. A hearing is also not required. If your case is dismissed, you will no longer have the protection of the automatic stay and creditors may take collection action against you for remaining debt. It is strongly suggested that you consult an attorney to assist you in determining the best course of action.
Can I convert my Chapter 13 case to a Chapter 7 case?
You may convert your Chapter 13 case to a Chapter 7 case, at any time, by filing a notice of conversion with the court. You are not required to send this notice to creditors. No hearing or order by the court is required. It is strongly suggested that you consult an attorney to assist you in determining the best course of action.
Can I convert my Chapter 7 case to a Chapter 13 case?
If your case has not been previously converted, you may file a motion to convert your case to a Chapter 13. The debtor must file a motion to convert with the court and serve notice of that motion to all creditors and interested parties. The court will then schedule a hearing to make the determination. It is strongly suggested that you consult an attorney to assist you in determining the best course of action.
What to expect from Creditors
What are the rights and obligations of creditors?
A creditor in a bankruptcy case is a person or entity to whom the debtor owes money or who claims to be owed money by the debtor. If you have received a notice from the Court about a particular bankruptcy case, it means that the debtor has listed you in the bankruptcy case as someone to whom the debtor owes money or might owe money. Because of the Automatic Stay, creditors are not allowed to begin or continue any efforts to collect the debt owed by the person or entity who has filed bankruptcy, and the creditor should contact an attorney for advice on how to proceed. If you believe the debtor is hiding money or property or is being untruthful in a bankruptcy case, call or write the U.S. Trustee (414-297-4476) or the case trustee. You can also send an email to the U.S. Trustee’s Fraud Hotline.
My ex-spouse has filed bankruptcy. What should I do? Does my divorce decree protect me?
If your ex-spouse has filed a chapter 7 and if you are a co-signer with your ex-spouse on a debt, the creditor can normally require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. The provisions of the divorce decree are not binding upon creditors. As this is a very complicated area of law, you should seek legal advice from an experienced bankruptcy attorney for a thorough explanation of your rights and obligations in this area as soon as you find out that your ex-spouse has filed a bankruptcy.
How long does it take for creditors to be paid?
If the case is a chapter 7 and the trustee has collected assets to be reduced to cash and distributed to the creditors, a notice is sent to the creditors to file a proof of claim. Depending upon the type of assets, it may take quite some time to reduce them all to cash. In some cases, the total funds available for distribution does not exceed the amount of administrative expenses (i.e., trustee’s statutory fees, professional fees incurred in collecting and reducing the assets to cash) and priority claims (i.e., taxes, etc.) so there is nothing left to distribute to the unsecured creditors. In any event, distribution from the estate to creditors is usually not made until the case is almost ready to close. In chapter 11, 12 and 13, payments are made pursuant to the confirmed plan which governs who gets paid, how much and when.
Do I have any student loan repayment options?
There are many different types of student loans and service providers and you may attempt to work out a repayment plan with the student loan lender that stretches payments out over a longer period or calls for graduated payments that increase as your earning potential increases. The federal loan programs have payment plan options for low-income borrowers. The Direct Loan program offers an income-contingent repayment plan and the Family Federal Education Loan program has an income-sensitive repayment plan. Under these plans, your monthly loan payment is based on your annual income, family size and loan amount. You can also postpone (or defer) your payments if you are not yet in default. In addition, you can apply for forbearance whether you are in default or not. Forbearance is a temporary stoppage of payments, extension of time to make payments, or acceptance of smaller payments. Unlike deferments, interest continues to accrue while you are in a forbearance period.
What happens if I fail to pay my student loan?
If you fail to pay your federally funded student loans, the federal Department of Education has the right to add collection fees onto the amount you already owe, seize your federal income tax refund, garnish a portion of your wages, and place liens on your property. The collections process for private student loans is different. You should review your private loan contracts carefully to better understand your rights and obligations regarding these loans.
Have changes in the bankruptcy law eliminated the right to file for personal bankruptcy?
No. The changes in federal bankruptcy laws in 2005 did not eliminate either chapter 7 or chapter 13 bankruptcy as an option for most individuals. However, the changes in the law did make it more complicated and expensive to file for such relief. The new law complicated the filing process by adding an eligibility requirement known as the “means test,” which determines whether a debtor’s household income is high enough so that the filing of a chapter 7 case would be considered an “abuse,” which would result in the case being subject to dismissal or conversion to chapter 13. This income level is based on a debtor’s family size and state of residence.
What is an adversary proceeding and how do I file a complaint?
An adversary proceeding is the Bankruptcy Court’s version of a civil complaint. It is governed by Federal Rule of Bankruptcy Procedure (FRBP) Rule 7001. Examples of actions requiring an adversary proceeding include: avoidance of transfers by the debtor; denial of discharge; revocation of discharge; dischargeability of particular debt; revocation of order of confirmation of a plan in chapters 11, 12 or 13; subordination of a claim or interest other than as part of a plan. If it is determined that an adversary proceeding is appropriate, complaints are filed in the Bankruptcy Clerk’s Office. Unless the complaint is electronically filed, each complaint must be submitted with a fully filled out Adversary Proceeding Coversheet. It is highly recommended that legal advice be obtained from a bankruptcy attorney or legal association.
How do I serve an adversary proceeding Summons and Complaint or motion?
The Court will issue the Summons. Proof of Service must show that the summons and complaint were served within 7 days of issuance of the summons. The Proof of Service form to be used is attached to the summons issued by the Court. The method of service depends upon whom the defendant is and where located, as set out below. Service of motions in contested matters is governed by Bankruptcy Rule 9014(b), which provides that a “motion shall be served in the same manner provided for service of a summons and complaint by Rule 7004.”
How do I answer a complaint?
If you are a defendant in an adversary proceeding, you need to file a written answer to the complaint. In the answer, you can respond to the claims against you. If you do not file a written answer, then a default judgment may be entered against you. Don’t delay in filing your written answer. You must file your answer with the Clerk of Bankruptcy Court within 30 days after issuance of the summons and you must also send a copy to all necessary parties.