The bankruptcy automatic stay is imposed upon your creditors when you file for bankruptcy. Creditors can't contact you for repayment of the debt once you file for bankruptcy and up until the debt is discharged.
Bankruptcy Codes and Bankruptcy Laws
According to the bankruptcy rules and laws, a person or business representative can file bankruptcy under Chapter 5, Chapter 7, Chapter 11, Chapter 9, and Chapter 13 of the U.S. Bankruptcy Code. The automatic stay applies in all cases once the bankruptcy voluntary petition is filed. The most commonly used chapter filings are discussed below:
- Chapter 7 - Chapter 7 bankruptcy is the most popular avenue for filing a personal bankruptcy or no asset case bankruptcy. In Chapter 7 bankruptcy, the debtor lacks the income or assets to repay creditors. The aim in Chapter 7 bankruptcy is to have debts discharged, so a repayment plan or reorganization plan isn't required. Because consumer debt is often involved, the automatic stay imposed when the bankruptcy petition is filed relieves debtors from harassment by creditors.
- Chapter 11 - A Chapter 11 bankruptcy is designed to prevent insolvency by allowing the debtor to reorganize and refinance. It may be used for personal bankruptcy, but is more commonly used by a bankrupt business. The cost and complexity of Chapter 11 bankruptcy makes it unattractive for filing bankruptcy as an individual. A reorganization plan must be confirmed by the bankruptcy trustee and court.
- Chapter 13 - Chapter 13 bankruptcy is used to file personal bankruptcy by a debtor who can repay creditors. A repayment plan is filed in a Chapter 13 bankruptcy, allowing creditors to receive partial payments according to the payment schedule in the plan approved by the bankruptcy trustee and court. A Chapter 13 plan is sometimes referred to as wage earner plan. After confirmation of the plan by the bankruptcy trustee and court, the debtor makes installment payments to creditors.
How to File Bankruptcy
If you're asking yourself "how do I file bankruptcy", US Legal Forms offers voluntary bankruptcy form packages for each state, designed by lawyers. There are simple step-by-step instructions, a how to bankruptcy guide, and all the bankruptcy forms you need in our bankruptcy form packages. How to file bankruptcy will depend on the facts in your case, such as whether you are seeking a personal bankruptcy or a Chapter 11, Chapter 13, or Chapter 7 petition. Our bankruptcy forms packages contain all the forms you need to file a bankruptcy petition, from the cover sheet to all of the bankruptcy schedules and official court forms you need to complete the process.
The debtor must complete all court forms, starting with the cover sheet. A debtor must list assets and income and fill out a list of creditors matrix. A Credit Counseling Briefing and the Debtor Education Course are required for everyone filing a personal bankruptcy. In the bankruptcy package offered by US Legal Forms, the bankruptcy forms include the required documents needed to take the Means Test. The Means Test is required to prove income and asset eligibility for filing a personal bankruptcy. A certificate of non-attorney preparation must be submitted when you have someone other than a bankruptcy lawyer prepare the forms. The non-attorney preparer must also sign a statement and disclosure certificate. If you are unsure which bankruptcy forms you need for filing bankruptcy, a bankruptcy forms package contains all the bankruptcy court forms you need at a significant saving over purchase of individual bankruptcy forms.
Who Can File Bankruptcy
An individual can file personal bankruptcy, or a partnership or corporation may also file voluntary bankruptcy. Bankruptcy must not have been filed in the previous seven years. A non-attorney bankruptcy preparer may be used, a bankruptcy lawyer isn't required. Individuals seeking a discharge of debts in bankruptcy must pass the Means Test and complete a debtor education and credit counseling course. The Means Test is used to prove to the bankruptcy court that the debtor has insufficient assets and income to repay creditors.
If filing a Chapter 11 bankruptcy or Chapter 13 bankruptcy, a Chapter 13 plan of repayment or Chapter 11 reorganization plan must be prepared. According to the bankruptcy code and bankruptcy rules, the repayment or reorganization plan must be approved by the bankruptcy court.
Why Bankruptcy May be Denied
If you're wondering about bankruptcy and how to file bankruptcy, you should consider the chances your voluntary petition for discharge in bankruptcy will be denied. If you are filing a voluntary petition for personal bankruptcy, your petition for discharge under Chapter 7 may be denied if you fail to pass the Means Test. Under the bankruptcy code and bankruptcy rules, an individual filing a voluntary Chapter 7 bankruptcy must pass the Means Test to prove inability to repay creditors. Failing to complete the debtor education and creditor counseling courses may also cause a voluntary petition to be denied. Also, failure to complete the court forms accurately and honestly can cause your bankruptcy petition to be denied by the bankruptcy court. For example, leaving a creditor off of the creditors matrix can cause your bankruptcy petition for discharge to be denied. All courts forms, even the cover sheet, must be completed and conform to the bankruptcy rules. If you are filing a Chapter 11 or Chapter 13 plan, the trustee and bankruptcy court must find it's in the creditors' best interests in order to approve your bankruptcy petition.
The Bankruptcy Code allows individuals and businesses to file a voluntary petition and seek a fresh start. US Legal Forms offers professionally prepared bankruptcy form packages that have all the court forms you need to file a voluntary petition for bankruptcy in your state. How to file for bankruptcy is also explained in a helpful bankruptcy guide.