Bankruptcy in Avon IN is a legal means of removing debt. It allows the debtor to make a fresh start. All bankruptcy cases require the debtor to file a petition with the court. The petition includes the debtor’s assets and how they earn income. Before a debtor can file, new bankruptcy codes require them to take financial counseling. The main advantage of filing bankruptcy is the automatic stay. The automatic stay prohibits creditors from pursuing further collection. There are different types of bankruptcy a debtor can file.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy liquidates non-exempt assets. non-exempt assets may include second vehicles, vacation homes, and special collections. A trustee sells the assets and the proceeds are used to pay creditors. If the proceeds are not enough to cover the debts, the remaining amount owed will get discharged. Not all debts can be discharged under Chapter 7. Non-exempt debts include current federal tax debts, alimony, child support, and court fees.
A debtor must also pass the Means Test. The Means Test determines if the debtors has sufficient income to pay debt. It keeps debtors from abusing the system. If the debtor has enough disposable income to pay debt, they cannot file Chapter 7.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows a debtor to repay debts under a new payment plan. Chapter 13 bankruptcy does not require liquidation of assets. Debtors commonly get three to five years to pay off debts. A debtor who choose Chapter 13 must provide proof they can make payments. A debtor may not be allowed to file Chapter 13 if they lack sufficient income.
To qualify, secured debts cannot be more than $1,149,525 and unsecured debts cannot be greater than $383,175. A variation of Chapter 13 is Chapter 11 bankruptcy. Chapter 11 allows small companies and limited liability companies to reorganize debts and remain in operation.
A debtor seeking bankruptcy has many options. It should not be seen as a negative, but a way to make a fresh start. However, bankruptcy must be carefully considered. Anyone considering filing Bankruptcy in Avon IN is advised to consult an attorney. For more details, visit www.thewrightlawgroupllc.com