We are a debt relief agency and the notices and disclosures set forth in these documents are being provided to you pursuant to section 527 of the Bankruptcy Code. The purposes of these notices and disclosures are:
(1) to make you aware of the various debt relief options that may be available to you;
(2) to make you aware of the duties and obligations that are required of persons who file bankruptcy cases;
(3) to make you aware of the various types of bankruptcy cases that may be available to you; and
(4) to make you aware of the costs and fees (including attorneys’ fees) that will be incurred should you decide to file a bankruptcy case.
- Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, creditors may have the right to file a motion requesting that your case be dismissed as an abuse of chapter 7. It is up to the court to decide whether the case should be dismissed.
- Under chapter 7, you may claim certain of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors and other expenses.
- The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does, the purpose for which you filed the bankruptcy case will be defeated.
- Even if you receive a chapter 7 discharge, certain type of debts are by law not dischargeable. Therefore, after the case you will still be liable for most tax debts and student loan debts; debts incurred to pay nondischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged by your chapter 7 discharge.
- Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a 3 to 5 year period. To be eligible for chapter 13 your debts must not exceed the dollar amounts set forth in the Bankruptcy Code.
- Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three years or as long as five years, depending upon your income and other factors. The court must approve your plan before it can take effect.
- After completing the payments under your plan, all of your debts will be discharged except debts for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; debts which are not properly listed in your bankruptcy papers; debts for acts that caused death or personal injury; and long term debts that are secured by valid mortgages or liens.