Bankruptcy is a legal process used when a person or an entity cannot pay its debts. It is generally imposed by a court order and is meant to provide relief to debtors, as they are no longer able to pay off the debt. There are a number of things to be aware of when filing for bankruptcy.
Discharge does not eliminate debt
In bankruptcy, a discharge is an order issued by a court that states that the debtor no longer has personal liability for a particular debt. There are certain criteria that must be met in order to qualify for a discharge. It is important to note that not all debts can be eliminated through bankruptcy.
Some non-dischargeable debts include student loans, alimony, child support, and spousal support. These debts must be repaid to the creditor.
Bankruptcy is a legal process that helps debtors to reorganize and eliminate debts. The court may also require additional payments and may extend the bankruptcy period.
While bankruptcy can help to eliminate a number of debts, there are a variety of statutory exceptions. Some debts are not automatically erased, including debts for fraud, student loans, government-funded debts, and spousal support.
Exempt property from bankruptcy
In a Chapter 7 Bankruptcy, debtors are allowed to exempt certain items of property. These items can be anything from clothing to furniture to a computer. Exemptions are based on the value of the item, minus any mortgages or liens. It is important to note that this rule can vary by state. For example, in Colorado, a debtor is allowed to exempt farm equipment for up to $25,000 if it contributes to the owner’s livelihood.
A bankruptcy trustee may also sell the non-exempt property to pay creditors. Typically, this is done at a discount. If the value of the asset is less than the exemption amount, the trustee pays the difference to the owner. The amount paid is usually the same as the estimated value of the asset, minus the fees of sale.
Liquidation of the nonexempt property after bankruptcy
Liquidation of nonexempt property is a common part of Chapter 7 bankruptcy. The bankruptcy trustee is responsible for collecting and liquidating the debtor’s assets. After the discharge of the debtor’s liabilities, the trustee distributes the proceeds of the sale of the debtor’s non-exempt property to the creditors.
A trustee’s decision to liquidate or not liquidate a specific asset depends on a number of factors. The trustee must consider the cost of liquidation and the likelihood of having sufficient funds available. He or she must also determine whether the asset is practical to sell. Ultimately, the value of the asset should weigh
in on the trustee’s decision.
For example, if you own a fancy car that is worth more than the value of your other assets, you may not want to sell it. It could prove difficult to find a buyer.
Opposition to bankruptcy discharge
If you file for bankruptcy, your creditor may oppose your discharge. This is called an adversary proceeding. The objector must prove that there are grounds for an objection.
Some reasons for an objection include a materially false written statement or misappropriation of funds in a fiduciary capacity. A creditor can also file an objection for failure to comply with a court order. For example, if you failed to provide your tax documents as required by the Bankruptcy Registrar, your LIT might oppose your discharge.
Debtors can respond to an objection by asking the court to reopen the case. Sometimes, the Bankruptcy Registrar will decide that no further action is needed. But other times, the trustee will require further payments.
An objection to discharge can also arise if the debtor fraudulently transferred title to the property. Another common reason is a failure to account for assets lost during the bankruptcy.
Formal proceedings can last a long time
One of the most daunting aspects of a formal bankruptcy is the long-term plan of execution. While it’s not unheard of for creditors to put up a fight, a fair amount of patience and perseverance are the order of the day. With the assistance of a credit counselor or debt coach, you can take the first steps toward a debt-free future. In the end, a fresh start is the best solution, regardless of the underlying cause. The trick is avoiding the pitfalls and identifying the stumbling blocks. Luckily, there’s a free helpline and online resources that can steer you in the right direction. So, if you’re in the market for a credit card counselor, be sure to do your homework and don’t go to the dark side. Seek professional advice from experts if you need it. In Harrisburg, PA a bankruptcy attorney can answer your questions and help with the legal process.