What is Consumer Bankruptcy?

• A proceeding under the Bankruptcy Code filed by an individual (or husband and wife) who is not in business.
• A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.

Consumer Bankruptcy - Updated Requirements

Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization. Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapters 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors.

As of October 17, 2005, the requirements in which a debtor may file Chapter 7 bankruptcy changed under the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are now required to seek budget and credit counseling six months prior to filing, financial “testing” is required to determine the debtor’s capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income as deemed by the state, and state exemptions cannot be applied unless the debtor has resided at current residence for over two years.

Due to the imposed requirements for Chapter 7 bankruptcy as set forth by the laws passed in 2005, debtors who were previously eligible to file under Chapter 7 now have to file under Chapter 13 bankruptcy instead, in which individuals and creditors agree to a court-imposed plan that requires some or all debts be repaid over five years, with an appointed trustee assigned to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual’s credit report for seven years in the case of Chapter 13, and up to ten years for Chapter 7.

Should I hire a Consumer Bankruptcy Attorney?

A lawyer that specializes in bankruptcy cases can get back on your feet financially.

Frequently Asked Questions

• What are the chances of renting a house during bankruptcy?
   It is entirely possible to rent a house during your bankruptcy proceedings, but there are certain steps that you can take to maximize your chances of doing so.  For instance, you might … more
• What should be included in a letter of explanation of bankruptcy?
   If you apply for credit or a loan following a bankruptcy discharge, the lender may request that you provide a letter of explanation of bankruptcy, which is simply your written statement … more
• How do I make a motion for judgment to be marked as satisfied in bankruptcy court?
  The only way to remove a judgment against you in court records is to either pay off, or satisfy, the judgment, or to have the judgment discharged through bankruptcy proceedings.  Even once … more
• How do I report bankruptcy fraud?
  In order to make a report of suspected bankruptcy fraud, you should contact the U.S. Department of Justice (DOJ) by mail or e-mail.  Your report should include the name and address of the … more
• What is a bankruptcy motion for reconsideration and how do I write one?
  A motion for reconsideration asks the bankruptcy court to reinstate a bankruptcy case thathas been dismissed for one reason or another.  In your motion, you should request the bankruptcy … more