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What Different Types of Bankruptcy Cases Should I Consider?
There are four types of bankruptcy cases provided under the law:
§ Chapter 7 is known as "straight bankruptcy" or "liquidation". It requires a debtor to give up property which exceeds certain limits called exemptions, so the property can be sold to pay creditors.
§ Chapter 11, known as reorganization, is used by businesses and a few individual debtors whose debts are very large.
§ Chapter 12 is reserved for family farmers and fishermen.
§ Chapter 13 is called debt adjustment. It requires a debtor to file a plan to pay debts (or parts of debts) from current income.
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.
If your income is above the median income for a family the size of your household in your state, you may have to file a chapter 13 case. A higher-income consumer must fill out "means test" forms requiring detailed information about income and expenses. If, under standards in the law, the consumer is found to have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that the consumer can not file a chapter 7 case, unless there are special extenuating circumstances.
Chapter 7 (Straight Bankruptcy) In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Chapter 13 (Reorganization) In a chapter 13 case you file a "plan" showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:
1. own your home and are in danger of losing it because of money problems;
2. are behind on debt payments, but can catch up if given some time;
3. have valuable property which is not exempt, but you can afford to pay creditors from your income over time. You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.
What Does It Cost to File for Bankruptcy?
The United States Bankruptcy Court's filing fees are now $274 to file for bankruptcy under chapter 7 and $189 to file for bankruptcy under chapter 13, whether for one person or a married couple filing jointly (these fees are subject to change). The court may allow you to pay this filing fee in installments if you can not pay all at once. ATTORNEY FEES ARE ADDITIONAL and vary from case to case.
Disclaimer: The materials on this web site are for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.
* Prices quoted in the web site "menu" above are the starting price for the products listed, some products may have additional cost. Prices quoted are for Chapter 7 or Chapter 13 consumer bankruptcy cases filed in the Federal Bankruptcy Court for the Eastern District of Virginia, in the Norfolk Division; any other division (such as Richmond or Newport News, VA U.S. Bankruptcy Courts) may have additional fees and/or costs. Extra fees and/or costs may apply to rush or expedited bankruptcy filings. Please read the entire web page(s) associated with the product(s) selected. If you have any questions, please contact us. Your satisfaction is our goal!
* The following information was accurate as of 01/25/2016: the current Court costs (United States Bankruptcy Court's Filing Fee, as charged by the Court, Eastern District of Virginia, Norfolk Division) for a consumer Chapter 7 Bankruptcy is $335.00 and for a consumer Chapter 13 is $310.00. Some other fees MAY apply, depending on your particular case, which may include obtaining credit reports, Homestead deed filing within your City or County Circuit Court, etc. (attorney will explain during consultation). The fees quoted herein are for bankruptcy filings in the United States Federal Bankruptcy Court for the Eastern District of Virginia, Norfolk Division (which includes, but is not limited to, for the residents of Virginia Beach, Chesapeake, Portsmouth, Norfolk, and Suffolk will file bankuptcy in) for qualifying debtor(s) only.