Thomsen Holman Wheiler PLLC attorneys provide services for Bankruptcy Law in Idaho Falls. There are two prominent types of Bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, commonly known as liquidation bankruptcy, is a process by which a trustee liquidates your nonexempt assets and distributes the proceeds to your unsecured creditors. Any remaining debt is discharged. If all of your assets are exempt, then all of your unsecured debt will be discharged. Following discharge, your unsecured creditors are prevented from ever collecting those debts.

If you are behind on a secured loan like a car or house, you will have to bring the loan current before you file bankruptcy under chapter 7 or make other arrangements with that creditor in order to keep the collateral. Otherwise, the secured creditor will have the right to take back the collateral through repossession or foreclosure. You will also have to continue making payments on secured loans after bankruptcy, if you keep the collateral. In other words, bankruptcy does not discharge secured loans.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a structured repayment plan created under the court’s supervision that allows you to repay unsecured creditors over three to five years. It also allows you to catch up on secured loans through the three to five year plan so that you can keep collateral like a house or a car. If you make all the plan payments for the required length of time, any remaining balance on your unsecured debts is generally discharged. Secured loans must continue to be paid, in addition to any catch up payments, in order to keep the collateral. The length of the chapter 13 plan is determined primarily by your level of income in the months leading up to bankruptcy and your monthly expenses.

Means Test

The Means Test is a calculation that is used to determine if you can file under chapter 7, or if you will be forced to file under chapter 13. If your annual income is above a certain amount, which varies by state and household size, the bankruptcy code forces you to file under chapter 13 so that you can at least partially repay your creditors over time. The Means Test involves many variables and is an important first step in determining how best to handle your case.

As a general rule, if someone is your spouse, or if someone lives in your house and is financially supported by you, that person is a member of your household.

“A household for means test purposes involves a debtor, those financially supported by the debtor, and the debtor’s spouse in a joint case if she does not otherwise rely on the debtor for support.” In re Bruyn, 2012 Bankr. LEXIS 775, at *16 (Bankr. D. Idaho, Feb., 9, 2012) (citing 11 USC §707(b)(2)(A)(ii)(I)).

How soon can I file bankruptcy again?

If you receive a discharge in bankruptcy, the law requires you to wait a certain period of time before you can receive a discharge in a subsequent bankruptcy. The wait times are from the date of filing to the date of filing and are as follows:

Chapter 7 to Chapter 7 – 8 years

Chapter 13 to Chapter 7 – 6 years

Chapter 7 to Chapter 13 – 4 years

Chapter 13 to Chapter 13 – 2 years