A Proof of Claim is generally filed by a Creditor. The Creditor will certify to the court the amount of the debt owed by the Debtor. A creditor will attach a detailed report which reflects the breakdown of the money owed by the Debtor. Bankruptcy can provide relief from both secured and unsecured debts.Some examples of unsecured debt are medical bills, credit cards and repossessions. Some examples of secured debt are mortgages; vehicle financing and secured loans such as second mortgages (HELOC) In a chapter 7, all unsecured debt, other than student loan debt, is discharged. This means the debt is no longer owed by the Debtor. In a chapter 13, the Debtor may be required to pay a pro rata share of their unsecured debt which is contingent upon factors such as income and assets. In both chapter 7 and chapter 13, a Debtor may discharge secured debt such as mortgage and vehicle debt. In general, IRS debt is generally non- dischargeable with exceptions related to criteria such as the type of debt, whether the return was filed timely and the year the debt was due. Once a bankruptcy is filed, the Debtor, or party who files the bankruptcy, is protected by the federal court. If a creditor does not abide by the rules set forth in the bankruptcy code, there may be sanctions brought by the debtor which are enforced by the federal bankruptcy court.
Chapter 7 generally takes 120 days from filing to discharge. Chapter 13 is generally 36 to 60 months. After discharge, Chapter 7 may be filed once every 8 years from the date of filing. A Chapter 13 can be filed at any time but restrictions or limits as to discharge and automatic stay provisions apply depending on how many times a case has been filed by the Debtor. An individual can file pro se meaning filing without an attorney. However, bankruptcy laws are complicated and are best dealt with by an experienced attorney. Chapter 13 generally lasts for 36 to 60 months.Chapter 7 generally takes 120 days from the date of filing. In chapter 7, assets that are not protected or exceed the limits of the allowable exemptions in your State may be liquidated. Exemptions refer to protected property including but not limited to equity in real property (i.e. land, house); vehicles; boats; household goods and belongings; cash/ bank deposits; personal property settlements; and claims against third parties. To avoid liquidation, a Debtor may choose to do a "buy back" of the value of such items,if applicable. Another option would be to file a chapter 13 and pay the unsecured creditors the value of the property that would be liquidated in a chapter 7. A creditor is defined as a party or entity to whom you owe money. If a creditor files for chapter 7 bankruptcy, you as a borrower should receive Notice from the court of the creditor's bankruptcy filing. Depending upon how much you owe the creditor, you may be contacted by the chapter 7 bankruptcy Trustee. Depending upon the circumstances, you may want to consult with an experienced attorney to discuss your rights. Credit generally improves within 12 months of filing.Chapter 7 generally eliminates or discharges unsecured debt such as credit cards, medical bills, and unsecured loans. Chapter 7 stops garnishments and repossessions. In general, the Debtor will not pay back any money to the unsecured creditors unless there are issues regarding unprotected assets, preferential payments or transfers of property. Chapter 13 is a repayment plan that lasts from 36 to 60 months based upon many factors such as income and assets. While in a Chapter 13, a Debtor has a plan payment which includes debts such as mortgage, vehicle, and IRS debt and a pro rata distribution which could be as low as 0% to unsecured creditors to 100% to unsecured creditors depending upon factors such as income, assets, preferential payments and transfers of property. IRS debt, Real Property Taxes and student loan debt can be paid through a chapter 13. Chapter 13 stops foreclosure; judgments and repossessions. Bankruptcy will not eliminate student loan debt, child support or alimony, most IRS debt (criteria apply); and any debt incurred as the result of fraud and/or criminal activity.In general, chapter 7 is a "quick bankruptcy" whereby discharge takes place after 120 days of filing. To file chapter 7, a debtor/debtors' income must meet certain criteria such as under median income, and exempt or "protected" assets.
In general, a Chapter 13 is filed when income is above median, the Debtor has assets that need to be protected and/or to stop a foreclosure sale, or repossession. A Chapter 13 is generally active for 36 to 60 months before discharge. Lien Stripping is a process where a Lien such as a second mortgage is "stripped" or discharged in a chapter 13 Adversary proceeding.