Understanding bankruptcy can be difficult, as bankruptcies are generally complex processes. They are used to essentially give debtors a clean slate after they have obtained significant amounts of debt that they are unable to pay back. There are many different situations in which filing bankruptcy may be required, which is why there are several different types of bankruptcy. Whenever you undertake a bankruptcy process, it is necessary to obtain legal counsel from a lawyer that is experienced in bankruptcy proceedings. Our legal services help to ensure that you understand the ins and outs of bankruptcy, including how it will impact your credit and financial situation.

How Bankruptcies Work

Bankruptcies are designed to serve as a way for individuals and businesses to eliminate all or part of debts that they are unable to otherwise repay. They are complex processes that require consultation with a lawyer. Throughout the bankruptcy process, the debtor will have a bankruptcy trustee assigned to their case. This trustee will act as a representative that is designed to act on the behalf of creditors. They will oversee most of the major proceedings under the bankruptcy agreement. The process will depend on the various type of bankruptcy used, as some bankruptcies require the sale of non-exempt assets, while others depend on a repayment plan. It is important to keep in mind that bankruptcies will have a long-term impact, as they remain on your credit for 7-10 years, depending on the type of bankruptcy.

Types of Bankruptcies

There are several different types of bankruptcies that are designed to handle several different financial situations. Chapter 7 and Chapter 13 bankruptcies tend to be the most common, as they are designed primarily for individuals. During a Chapter 7 bankruptcy, a bankruptcy trustee will oversee the sale of assets that aren’t exempt. The money from these assets goes toward paying creditors. Chapter 13 bankruptcies allow for the individual to keep their assets, as it focuses on designing an effective repayment plan to allow debtors to make more manageable payments.

There are many additional types of bankruptcies, as well. A Chapter 11 bankruptcy is intended to aid businesses, while a Chapter 9 bankruptcy is designed for cities or towns. Chapter 12 bankruptcies are used for both family farms and family fishermen.

The Primary Reason for a Chapter 12 Bankruptcy

Chapter 12 bankruptcies are used to help family farmers or family fishermen to continue with their regular processes while allowing them to restructure their debt and repayment process. These kinds of bankruptcies put an automatic stay, which prevents creditors from proceeding with many options for a period of time while the individual files for bankruptcy. An additional benefit of Chapter 12 bankruptcies is that they help to protect co-signers, even if they haven’t filed for bankruptcy. Chapter 12 bankruptcies tend to be less complicated and expensive than Chapter 11 processes.

Chapter 12 bankruptcies are similar to Chapter 13, though they are far more flexible. The process includes creating a payment plan for disposable income. This plan lasts a minimum of 3 years and a maximum of 5, depending on the specific situation. When a Chapter 12 bankruptcy process is undergone, it will be important to compile many different documents. You need to provide a list of creditors. This list should include both the amounts and nature of the claims. You will also need to provide a document outlining the source, amount, and frequency of all income. Include a list of all property or assets that you own, as well as a detailed list of all monthly farming and living expenses. Consulting with a legal professional may allow you to determine the superior type of bankruptcy for your specific financial situation, whether you need to file as a business or an individual.

Eligibility for Chapter 12

Chapter 12 bankruptcies are only available for a limited type of individual, as they are designed to meet the unique financial needs of family farmers and fishermen. In order to qualify for a Chapter 12 bankruptcy, the total debt must be under a specified amount. For farmers, debts may not exceed $4,153,150. For fishermen, the debt may not exceed $1,924,550. There are also specific requirements for how much of the debt must relate directly to the operation of the business. For farms, this amount is 50%, while the amount is 80% for fishermen. Additionally, more than 50% of the total income must come from the operation of the business.

Chapter 12 Bankruptcy Discharge

Many debts can be discharged during a Chapter 12 bankruptcy process. After all payments under the repayment plan have been made, additional debts may be discharged. The individual must certify that they are up to date on all domestic support obligations, such as alimony or child support. Debts that can’t be discharged generally include domestic support obligations, debt due to malicious and willful damage to either property or injury to a person, debt due to personal injury or wrongful death caused by driving under the influence, as well as debts for the payment of money acquired by filing false financial information, fraud, or more.

Chapter 12 bankruptcies also allow for a hardship discharge. These conditions may allow the debt to be discharged when the debtor is unable to make all of the payments under the plan. The debtor must show that the inability to make payments is due to reasons beyond their control and isn’t their fault. Some of the most common reasons for a hardship discharge include illness or injury. In order for debts to be discharged, the creditors must have received at least as much as they would have in a Chapter 7 bankruptcy case.

Any kind of bankruptcy can be rather complicated. For this reason, we highly recommend that you obtain superior legal counsel when you intend to undertake a bankruptcy of any sort. Here at LeBaron & Jensen, we have a team of legal professionals that are experienced in bankruptcy law. To learn more about Chapter 12 bankruptcies, or to obtain superior legal counsel, contact us today!

Bankruptcy comes with an inherently negative connotation, for very good reason. It is a decision that should be considered carefully, as it can significantly damage your credit and results in many consequences in your life. However, not everything about bankruptcy is bad and there are several benefits to filing for bankruptcy, despite the downsides. However, when you decide to file for bankruptcy, you need to consult with a legal professional to learn both the pros and cons of bankruptcy and determine how bankruptcy will impact your life.

Automatic Stay

In many cases, filing for bankruptcy will result in an automatic stay being issued from the court. This is a legal injunction that stops any kind of collection from debtors. This can be incredibly helpful, as it will stop collectors from harassing you. You won’t have to dodge phone calls to avoid collectors, as the automatic stay will legally prohibit these collectors from contacting you until further proceedings have been completed. This can make your life much easier.

Clears Debt

Bankruptcy can help to either clear your debt or create a repayment plan for debts that cannot be discharged. An incredible advantage to this is that the cleared debts are gone permanently, which means that these debts will no longer impact your life and will allow you to focus on rebuilding your credit and your life.

There are both advantages and disadvantages of filing for bankruptcy. It is absolutely vital to obtain superior legal counsel to ensure that you are able to procure the best result after your bankruptcy case has been settled. Our attorneys are experienced and are able to effectively guide you through the bankruptcy process. To learn more about the impact bankruptcy can have on your life, contact us at LeBaron & Jensen today!

Bankruptcy has a significant impact on your credit. The overall impact will depend on the type of bankruptcy that is filed, but a bankruptcy generally imposes a harsh penalty on your credit score for 7-10 years. Due to the impact that a bankruptcy has on your credit score, it will be vital to take the proper steps to repair your credit after the bankruptcy has ended. Bankruptcies provide you with the opportunity to rebuild your life, which is why it is important to take the necessary steps to repair your credit after bankruptcy.

Carefully Monitor your Account Statuses and Credit Report

It is important to monitor your accounts carefully to prevent errors from further damaging your credit score. Each account on your report should say “discharged” or “included in bankruptcy.” If the status says anything different, there is likely an error that needs to be resolved. In addition to this, you will need to make sure that all of the balances are zeroed out, rather than stating any balance. You will want to monitor your credit closely during the time following your bankruptcy to ensure that the changes you are making are having a positive impact on your credit.

Get New Credit

The only way to build up your credit after bankruptcy is to get new credit. This can be rather difficult, especially as many credit applications may be rejected due to the bankruptcy. One option in this situation is to apply for a secured credit card. These cards require a security deposit. The credit limit is generally the amount of the deposit minus any relevant fees. In many cases, consistent, reliable payments will result in the company awarding you an unsecured credit card after a period of time. Retail cards are another option for building your credit, as they generally have less stringent credit requirements. Ensure that you make all of your new credit payments on time and keep the balance on your credit card below 30% of the credit limit.

Be patient when you attempt to rebuild your credit. It is a process that can take months and even years to complete. Bankruptcy has a significant impact on your life, which is why it is important to consult with a legal professional when you intend to file for bankruptcy. To learn more about bankruptcy and the impact it can have on your life, contact our experts at LeBaron & Jensen today!