Bankruptcy is not as simple as telling a judge, “I’m broke!” There is a process that individuals and businesses must follow. The goal is to give the debtor a fresh start while giving creditors the chance to receive some measure of repayment based on assets available for liquidation and/or income earned. A court-appointed trustee oversees bankruptcy cases in accordance with federal law, enacted by Congress.
The bankruptcy process typically involves two types of debt: secured and unsecured. Secured debts are tied to collateral, such as a home or car loan. Unsecured debts include credit card and medical bills. Some forms of bankruptcy allow for the discharge of all or a portion of these debts. Debtors must also consider the impact of bankruptcy on their credit rating and employment prospects.
A person or business who files for bankruptcy is subject to an automatic stay, a legal order that stops most collection actions by creditors. The stay applies to lawsuits, foreclosures, garnishment and wage garnishment. However, a creditor with a valid lien on property may still pursue the seizure of that property through the courts. The trustee will examine the debtor’s assets and liabilities, including both real and personal property, to see if any can be sold to repay creditors.
During the bankruptcy process, a debtor must disclose all of their assets and liabilities to the trustee overseeing their case. A bankruptcy attorney such as Cain & Herren, Maui can help you with that. A bankruptcy trustee can sell nonexempt assets to pay creditors, though some types of property are protected from sale through exemptions. The trustee will also determine if any debts can be discharged. Not all debts can be discharged, including most student loans, child support and alimony, certain tax debts and criminal fines and restitution.
After the meeting, a bankruptcy trustee will file a report with the court that details how he or she intends to proceed with the bankruptcy case. Creditors may object to the plan or request additional information, but these objections are rarely successful. During this time, the trustee will also conduct an investigation into the facts of your case.
Depending on the type of bankruptcy filed, the trustee will either liquidate assets to repay creditors (Chapter 7) or create a plan for repayment (Chapter 13). Chapter 7 bankruptcy is often associated with individuals who have minimal or no assets. Chapter 13, on the other hand, is designed for those who earn enough money to repay a portion of their debts over three to five years. In most cases, the unsecured debts will be completely discharged at the end of this period. For some, this will provide a much-needed financial lifeline. For others, it will put them on a path to long-term financial stability. Either way, we will be by your side throughout the entire bankruptcy process to ensure that your rights are protected and offer guidance on how to move forward.
Cain & Herren, ALC
2141 W Vineyard St, Wailuku,
HI 96793, USA
+1 (808) 242 9350
cainandherren.com
