Bankruptcy is a work no one wants to think about, but it does happen. When it does, it’s helpful to know what you’re getting into. There are different bankruptcy chapters you can file under depending on why you’re filing, your type of business, if you’re filing as a business at all, and several other factors. Filing for bankruptcy is a way of maximizing a debtors remaining asset to owed parties and giving the debtor a chance to start again with a clean slate. If you file Chapter 7, you are not obligated to follow a court-assigned repayment plan but you’ll likely lose much of your property. If you’re a larger company and/or want to keep your property in exchange for a longer repayment period, Chapter 13 is the best option.
In various cases of bankruptcy, what is the role of a bankruptcy trustee in the process?
In short, the trustee is appointed by the court to oversee the liquidation and re-purposing of assets.
With any luck, you will never have to deal with a bankruptcy situation. But if you have to file for it, it’s best to go in with as much working knowledge of the process as possible. Remember, the point of filing for bankruptcy is to get yourself out of debt, liquidate assets, and give yourself a chance at starting again. It’s a scary prospect and a complicated process, but it’s intended to help.
Chapter 7 is designed for consumers with limited income resources to help pay off various debts. Under Chapter 7, all your property will be subject to liquidation in order to pay off debts. While some pieces of property can be exempt from liquidation, chances are most of what you own will be put towards generating revenue towards debts. During this process, a trustee will be appointed by the court to oversee the liquidation process, determine what is and isn’t eligible for liquidation, and be the point person on the recoup of revenue.
Chapter 13 filing involves a larger company and the installment of a payment plan over a course of several years to pay back assets owed. This is a longer, larger process, and will be monitored for longer. In general, the repayment period is anywhere from 3 to 5 years, during which time the trustee will be involved. In this process, the trustee, in addition to performing general house cleaning duties of providing and ensuring the filing of documents, the trustee will also assess the repayment plans, collect payments, and ensure it is redistributed to the appropriate parties. It’s not too different from their role in Chapter 7 but involves a lot more moving parts and for a longer period.
Is It Better to File Chapter 7 or Chapter 13?
Your personal circumstances will dictate what is right for you. In order to file for Chapter 7 you’ll have to be below a certain ceiling of income as it’s designed for those who don’t have enough income to pay of their debt. If you make below a certain amount, then that might be for you. But if you make too much to qualify for Chapter 7, the benefit of Chapter 13 is that you don’t have to sell your possessions. The tradeoff is, of course, that the process is longer. Ultimately, it will be up to your circumstances.
What is the Threshold for Chapter 7?
Income limits are going to vary by state. Over 95% of debtors who filed for Chapter 7 had their debts paid off, at the expense of their personal belongings of course. When looking at your eligibility for Chapter 7, all income and debt will be taken into consideration when determining eligibility. But generally speaking you must make below the mean income of the state in order to qualify. So, before filing, check the mean income of your state and compare it to your own.
Debt is stress inducing and has ruined lives. Bankruptcy is scary, but it’s designed to help you. It’s not something to be ashamed of and not something to be scared of. Knowing what you’re entitled to and what you’re going to get yourself into is half the battle and can be done before you even file. Don’t go in blind.
How Can I Get Help?
An experienced and knowledgeable bankruptcy attorney can help make the bankruptcy process go smoothly and make it less stressful. The bankruptcy attorneys at Border Law in Southfield, MI are trusted, compassionate and can help you find the right debt solution for your situation.
We are a full-service Bankruptcy Firm that specializes in Chapter 7, Chapter 11, and Chapter 13. Our goal is to use our 15 years of knowledge and expertise to provide a stress free and smooth experience for the individual or business facing bankruptcy. We can pave the way for debt relief and help clients get the fresh start they deserve.