Bankruptcies are handled in Federal court, and the process is designed to help businesses and individuals repay or eliminate debt under the court’s protection. Chapter 7 is sometimes called “liquidation” bankruptcy, and it involves the entity asking the court to discharge some or all of their debts. In return, the individual or business’ property is sold, with the proceeds going to the creditors. Chapter 13 is a reorganization bankruptcy, where the business or individual files a repayment plan with the court. Some debts can be eliminated, while full payment is required in other cases.
Chapter 7
Sometimes referred to as “straight bankruptcy”, Chapter 7 liquidates the filer’s assets. If your debt to income ratio is high, this type of Bankruptcy in Cedar Rapids may suit your needs. Under the rules of Chapter 7, most debts can be eliminated, but you will lose a significant amount of your assets. Some assets are exempt; your bankruptcy attorney can tell you more about your state’s exemptions.
Discharge of Debt Under Chapter 7
Some debts can be eliminated, while others must be repaid-;and there are certain kinds of debt that take priority over others. Taxes and your case’s administrative fees must be paid first, and these debts are often the only ones that may be paid off. Debts that can remain after your Bankruptcy in Cedar Rapids are:
- Spousal and child support
- Taxes
- Student loans
- Government penalties and fines
- Debts accrued after filing
The Chapter 7 Process
Filing for Chapter 7 takes about six months from start to finish, You’ll need to fill out a petition and various forms listing your living expenses, debts, exemptions, income, assets and expenditures during the last two years. After filing the forms with your local bankruptcy court, you will receive an automatic stay, which prevents any further collection attempts. During your case, nothing can be paid or liquidated without the consent of the court. If it will not cause harm to your creditors, you can petition for dismissal of your Bankruptcy in Cedar Rapids.
Hiring a Bankruptcy Attorney
Bankruptcy is a complex process, and you should not go it alone. Bankruptcy lawyers know state laws and regulations, and can guide you through your filing and your case.