The Bankruptcy Process and Terminology
The concept of bankruptcy is a creation of the Congress of the United States. The purpose of bankruptcy, prepared by a qualified bankruptcy attorney, would be to manage individuals and businesses a chance for an orderly procedure wherein their debts have been discharged in their entirety or reorganized according to bankruptcy laws. The bankruptcy procedure is conducted in a Federal court system of USA Bankruptcy Courts, which are split into several hundred districts of the united states.
Bankruptcy Court Massachusetts
As a bankruptcy attorney, Coleman & MacDonald Law Office practices in the Boston and the Metro West regions of the Commonwealth of Massachusetts. The bankruptcy procedure comprises two components; a liquidating bankruptcy wherein, theoretically, a debtor’s non-exempt assets are sold by the bankruptcy court, and the proceeds are distributed to the creditors on a percent basis. This concept is most commonly understood as the Chapter 7 bankruptcy event.
As a practical matter, not many individuals possess non-exempt assets taken from them by the bankruptcy court. Nevertheless, the discharge can allow them the completion of an approximate four-month procedure from the US Bankruptcy Court. The other variation of a bankruptcy proceeding is a reorganizational bankruptcy, accomplished through a Chapter 13 bankruptcy proceeding.
The New Bankruptcy Code
On October seventeenth, 2005, the US Bankruptcy Code was changed spectacularly. It had been the first significant change in bankruptcy law since 1978. While widely promoted as a procedure, filing a bankruptcy proceeding made it much more strenuous. The fact is that a vast majority of individuals remain qualified for Chapter 7 bankruptcy proceedings. The bankruptcy code’s major implications require all individuals filing for bankruptcy to acquire credit counseling before filing.
Numerous credit counseling agencies are available to the possible debtor in the Metro West and Boston areas. Credit counseling can be accomplished simply online or by phone. The other major component of the bankruptcy code would be the rigorous analysis of the debtor’s gross earnings.
A software program from the US Ministry of Justice examines a debtor’s profits utilizing pre-determined expenses calculated by the geographic area where the bankruptcy case was filed. Further, an income threshold is established for Chapter 2 bankruptcy purposes. The bankruptcy court distinguishes between individual debtors’ families of three and upward.
Chapter 7 Bankruptcy Proceedings
A consumer Chapter 7 bankruptcy proceeding is also, by far, the most frequently registered bankruptcy proceeding. Over ninety percent of all bankruptcies filed in the Boston and Metro West areas are Chapter 7 bankruptcy proceedings. These proceedings are initiated by individuals, or people who were married, to achieve a fresh start. The major contributing factors to Chapter 7 bankruptcy are loss of sickness, employment, divorce, and unexpected family crises.
The practice of filing a Chapter 7 bankruptcy proceeding is initiated by completing a petition in bankruptcy. The petition for bankruptcy consists of four sections. The first section lists all the debtor’s assets, including all the real estate and private property held. The second section of the petition schedules out a debtor’s household income along with their household expenses. The third portion of Chapter 7 bankruptcy proceedings will be the completion of a questionnaire entitled “Statement of Financial Affairs,” which covers the fiscal activity of the debtor over the last few decades.
An investigation of the debtor’s gross salary utilizing a formulation will be set forward and periodically adjusted by the US Department of Justice. Based on the debtor’s residence, the finished bankruptcy petition is filed with the US Bankruptcy Court in the relevant area. Roughly 30 to 40 days after filing a Chapter Seven bankruptcy petition, an examination of the debtor is conducted by employing a trustee appointed by the US Bankruptcy Court to examine the debtor.
In general, these exam sessions last only a few minutes because each of the relevant questions the bankruptcy trustee might have are contained in the bankruptcy petition. Following the bankruptcy court’s examination of the debtor, sixty days is allowed for the creditors to submit any complaint that they might have to allege fraud or misconduct from the debtor.
The sincere debtor in Chapter 7 bankruptcy proceedings will always be given a discharge. The discharge in bankruptcy is powerful and complete. All civil debt like credit cards, bank loans, bank loans, department store credit cards, hospital bills, medical expenses, dental bills, utility accounts, and personal loans are discharged by the head of Chapter 7 bankruptcy proceedings.
Court judgments obtained by lenders before filing a Chapter 7 bankruptcy are also discharged. Even though removing tax obligations in Chapter 7 bankruptcy proceedings can be complicated, a general guideline will be that any income taxes assessed and outstanding from the debtor for over three decades will probably be evacuated through the head of Chapter 7 bankruptcy proceedings.
The phenomenon of reverse real estate has recently resulted in many single or married people filing a Chapter 7 bankruptcy case to extricate themselves from the monetary obligations pertaining to real estate that are worth fewer outstanding obligations to the mortgage holder. In this instance, a real estate mortgage and a note could be discharged in Chapter 7 bankruptcy proceedings.
Chapter 13 Bankruptcy Proceedings
A Chapter 13 bankruptcy case is different than that of Chapter 7. In Chapter 13 bankruptcy proceedings, an individual or couple represents to the bankruptcy court that, though they’re in debt, they feel that given enough time, they can reorganize their debt with a payment plan. Filing for a Chapter 13 bankruptcy can be employed to conserve the debtor’s residence.
A Chapter 13 bankruptcy filing will stop any foreclosure proceedings from going forward. A Chapter 13 bankruptcy proceedings will enable the debtor to repay the money which they’re behind on their mortgage, or mortgages, over a period of up to five decades.
Depending upon the income and expenses to be paid, a debtor submits a Plan of Reorganization wherein the debtor proposes to pay all or a portion of the debtor’s debt with time. The amount to be paid depends on how much the debtor can afford. As is the case of the head Chapter 7 bankruptcy proceedings, a Chapter 13 bankruptcy proceeding is initiated by filing a Chapter 13 bankruptcy petition.
The petition itself is comparable to that of the Chapter 7 bankruptcy proceedings, except, in the Chapter 13 bankruptcy proceedings, the debtor submits the Chapter 13 plan to the court.
An excellent bankruptcy attorney can employ the pertinent portions of the US Bankruptcy Code to the individual debtor’s situation to invent a Chapter 13 Plan which complies with all applicable bankruptcy legislation. A Chapter 13 bankruptcy proceeding is a tool for protecting debtors’ homes nationwide.
Approximately 30 or 40 days after the Chapter 13 bankruptcy petition is filed with the US Bankruptcy Court, the Chapter 13 trustee, a single lawyer, will conduct a confirmation hearing in the US Bankruptcy Court. The confirmation hearing is an evaluation of the debtor to ensure that the request has been properly filed, the Chapter 13 Plan of Reorganization filed by the bankruptcy lawyer, and the debtor complies with all applicable bankruptcy legislation.
At the end of the confirmation hearing, a monthly amount is based on the bankruptcy lawyer, the debtor, and the Chapter 13 trustee. This amount will be forwarded to the Chapter 13 trustee’s office monthly before the end of the Chapter 13 plan. The debtor need only send a single payment to the Chapter 13 trustee, who then distributes the funds to the creditors participating in the Chapter 13 bankruptcy proceedings.
In the conclusion of the necessary payments, the US Bankruptcy Court will issue a discharge to the debtor. It must be noted that whatever debt remains unpaid at the end of the Chapter 13 bankruptcy proceedings is discharged similarly to a Chapter 7 bankruptcy discharge.
Chapter 11 Bankruptcy for Businesses in Massachusetts