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For individuals, there are two types of bankruptcy protection vehicles, chapter 7 and chapter 13. Chapter 7 bankruptcy is commonly known as a liquidation bankruptcy, and usually refers to a person with little or insufficient disposable income. Chapter 13 bankruptcy is often referred to as a reorganization bankruptcy and is eligible for individuals who have a regular income or make more than a certain threshold amount.

Pursuant to letter 11 U. S. C. Section 362 (c), the automatic stay protection is a temporary federal injunction that immediately stops most collection efforts (home foreclosures, car repossessions, wage garnishments) by creditors (banks), collection agencies, and government entities against a debtor, their property, and other lawsuits.

While numerous debts are dischargeable through bankruptcy, there are specific debts and obligations for which you will be responsible for. These include, but are not limited to: matrimonial issues like child support and alimony payments, student loans, criminal restitution, debts for personal injuries/death resulting from a DUI/DWI, and certain taxes. The way that a debt is discharged will differ depending on whether your file for chapter 7 or chapter 13 bankruptcy.

Within 14 days of filing the bankruptcy petition, schedules of the debtor’s assets and liabilities must be filed. The failure to do so will result in dismissal of the bankruptcy case.

The 341 meeting of the creditors is a hearing all debtors must attend in any bankruptcy, usually held 20 to 30 days after the filing of the bankruptcy petition. At this meeting, there is a trustee or representative of the U.S. Trustee to review the debtor’s petition and schedules face-to-face with you, the debtor, and your attorney. You, as the debtor, are required to answer questions under the penalty of perjury about your conduct, property, liabilities, financial condition, and any other matter that may affect discretion of the case or your right to discharge. This procedure is to ensure that you, the debtor, understand the bankruptcy process.

Before filing bankruptcy, federal law (since 2005) requires you to undergo credit counseling. Credit counseling is intended to instruct you as to personal financial management. Pre-filing and post-filing counseling is mandatory in order to file for bankruptcy and obtain a discharge. The pre-filing and post filing certificate of completion must be filed with the court. We will provide you with additional explanation and a list of court approved credit counselors.

A credit matrix is a list of the creditors in your case which must be filed in the proper format so that it can be used by the court’s automated noticing system. Any matrix which does not conform to requirements will be considered deficient and will slow the progress of your case, and may even lead to its dismissal. If a creditor is left out, an amendment to the matrix list can always be done prior to your case being discharged.

A discharge releases a debt from personal liability debts, known as dischargeable debts, and prevents the creditors that are owed those debts from taking any action against the debtor to collect the debts as a personal obligation. It does not discharge enforcement of a lien or other encumbrance on property of the debtor. In other words, bankruptcy stops further legal action against you, through what is called an “automatic stay”. The discharge also prohibits creditors from communicating with you, the debtor regarding the debt.

The bankruptcy court analyzes your ability to file for bankruptcy by considering your state’s income threshold, the number of dependents you have, exemptions, and the schedules that you have filed. These schedules include: 1) schedules I and J, which reflect your income and expenses, and 2) the means test analysis, which will determine if there is a presumption of abuse.

The means test is used in cases where the chapter 7 individual debtor’s current monthly income exceeds the state’s median family income. It is used to determine if the debtor has the ability to repay a minimum level of general unsecured debt after the repayment of allowable monthly expenses. If the means test shows a debtor has such an ability to repay, there is a “presumption of abuse”. In other words, if the debtor(s) receive(s) a chapter 7 discharge, this would be an abuse of the bankruptcy process, because the debtor(s) may have the ability to repay debts outside of bankruptcy or through a Chapter 13 repayment plan over time.

Judgments are not automatically discharged in bankruptcy. Whether you file a chapter 7 or chapter 13, a motion for lien avoidance must be filed with the court and you must be able to show that the debt is not secured. Once the motion is filed, a hearing will be held and you will have to appear before the judge, who will make a decision and render an order to avoid the lien. Once the order has been granted, that notice of entry must be prepared and filed with the state court where the judgement originated. Otherwise, the judgment will never be removed. All interested parties to the judgment must be served.