Depending on your case, there are specific steps you need to take with your attorney to complete the bankruptcy proceeding and get a discharge. In some cases, discharges are basically automatic. Once you have received one, the clerk of the court will mail copies of it to your debtors and to the U.S. Trustee and the trustee assigned to your case. The discharge order does not specify which debts have not been discharged, in cases where a judge determined certain debts were not dischargeable. The order merely informs creditors that their debts owed by you have been discharged and they must not do anything further to try to collect those debts. Creditors who fail to heed the order can be sanctioned. You and your Tampa bankruptcy attorney will also receive a copy of the discharge.
Generally, a debtor is entitled to a discharge in a Chapter 12 or 13 case once he or she has completed the payment plan. Creditors cannot object to discharge in Chapters 12 or 13 cases. Creditors can object to the payment plan, but once the payments have all been made, creditors cannot object to discharge. Some debts are not eligible for discharge. Debtors are still responsible to pay debts that have not been discharged. Federal law lays out several types of debts that cannot be discharged in individual bankruptcy cases. Congress exempted these types of debts for public policy reasons.
There are 19 categories of debts that cannot be discharged in Chapters 7, 11 and 12 cases. Generally, certain tax debts cannot be discharged. Debts owed for alimony or spousal or child support, government fines and penalties, debts owed because of misconduct or criminal acts, certain types of government-guaranteed student loans, and condominium and cooperative housing fees are among the kinds of debts that generally cannot be discharged. Debts owed as a result of drunk driving are also ineligible for discharge. Additionally, any debts not listed by the debtor in the bankruptcy case cannot be discharged. Creditors can also request that a debt be taken out of the bankruptcy case if they can prove that the debt is due to maliciousness or fraud.
A more limited list applies in Chapter 13 cases, meaning more types of debts can be discharged. For example, debts for willful and malicious injury to property, debts incurred to pay non-dischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings can all be discharged in a Chapter 13 case. Usually debts in a Chapter 13 case are only discharged after the debtor pays them according to the payment plan approved by the court. There are cases where an unpaid debt will be discharged because of a hardship. Hardship discharges are only available when the hardship is a circumstance beyond the debtor's control. Certain debts aren't eligible for a hardship discharge in Chapter 13 cases. The exemptions are similar to the exemptions in Chapter 7 cases. A Tampa bankruptcy attorney can review your case and inform you on the debts that cannot be discharged.
A judge may deny a discharge for a variety of reasons, including failure to complete a financial management counseling class. Additionally, in Chapter 7 cases, a judge may deny a discharge in cases of suspected fraud, concealment of assets, destruction of records, failure to account of lost assets or violation of a court order. There are also time restrictions built into bankruptcy law that prohibit a discharge within a certain time period of a previous discharge. Debtors receive a discharge in 99 percent of Chapter 7 cases that aren't dismissed or converted.
The creditors' meeting is scheduled by the U.S. trustee or bankruptcy administrator within a few weeks of the court receiving the bankruptcy petition. During the meeting, the debtor will be put under oath and must answer questions from the trustee and from any creditors who attend the meeting. In many Chapter 7 cases, no creditors attend the meeting and it's quite short. If the bankruptcy petition is a joint petition of a husband and wife, both must attend the creditors' meeting. The trustee is required to inform the debtor of the potential consequences of bankruptcy. The trustee may also ask for additional documents and records from the debtor. Within ten days of the meeting, the trustee will inform that court of whether the debtor passes the means test. A Tampa bankruptcy attorney can attend the creditors' meeting along with you and help you deal with the creditors' objections to your bankruptcy petition.
In Chapter 7 cases, creditors can object to debts being discharged. There are very specific time limits to file such objections. Additionally, the trustee or the U.S. trustee can object to certain debts being discharged. If a creditor files an objection to a debt being included in a Chapter 7 cases, a lawsuit is filed that will begin what's called an adversary proceeding.
If a debtor files for Chapter 7 and has a monthly income is more than the state median, a judge will apply a means test to determine if the Chapter 7 filing should be considered abusive. Application of the means test is complicated and differs somewhat by state. Generally, if the debtor's current monthly income is more than $10,950 or 25 percent of debtor's non-priority secured debts, he or she may not be able to declare Chapter 7. The monthly income is figured by deducting certain allowed expenses. A debtor may petition the court to include other expenses in order to qualify for Chapter 7. If the debtor's Chapter 7 filing is deemed abusive because of the means test, the case will generally be converted to a Chapter 13 case or dismissed. A Tampa bankruptcy attorney can review your case and advise you on your eligibility for filing a Chapter 7 bankruptcy.
In a Chapter 7 case, the case trustee is appointed by the court to administer the case, sell the debtor's assets and use the proceeds to pay the creditors. Most Chapter 7 cases are no asset cases, however, meaning there are no non-exempt assets to be sold. In these cases, creditors generally won't bother to file claims to recover their loans because there are no assets and none will be paid. The trustee's goal is to get the maximum return for the creditors by selling the assets at the highest possible price. The trustee will sell all unsecured assets and any secured assets that are worth more than the security interest on the lien.
If assets are subsequently discovered, the creditors will be notified and given the chance to file proof of their claims in the case. While there may be no legal requirement for a creditor to file a proof of claim in a bankruptcy case, there are often reasons to do so. A creditor with claims against someone who has filed for Chapter 7 protection should contact a qualified Tampa of St. Petersburg bankruptcy attorney.
There are six classes of creditors and in each class, the creditors must be paid in full before the creditors in the next lower class can recover anything. The debtor is only paid after all creditors have been paid, so generally the debtor's main concern is that certain assets are protected and that most if not all of the debts are discharged.