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Types of Unsecured Debt

In bankruptcy proceedings, debts are categorized based on their priority and secured status. Priority unsecured debt and general unsecured debt are two different classifications that determine the order in which creditors are paid back during the bankruptcy process. Here is a breakdown of the differences: Priority Unsecured Debt: Priority unsecured debt refers to debts that are considered more important or "prioritized" than other unsecured debts when it comes to repayment in a bankruptcy case. These debts have a higher legal ranking and must be paid before general unsecured debts. Priority unsecured debts are usually related to specific types of obligations established...

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What Is An Order For Relief In Bankruptcy

An order for relief in bankruptcy refers to a court-issued order that initiates the bankruptcy process for an individual or entity. It is typically granted by a bankruptcy court in response to a bankruptcy petition filed by the debtor or their creditors. When a debtor files for bankruptcy under either Chapter 7 or Chapter 11 of the United States Bankruptcy Code, they submit a petition to the bankruptcy court. Once filed the Court it issues an order for relief. The order for relief has several significant effects: Automatic stay: Upon the issuance of an order for relief, an automatic stay goes into effect....

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A Fresh Start is Accomplished Through Bankruptcy Exemptions

Exemptions in bankruptcy are provisions that allow debtors to protect certain assets from being liquidated to pay off their debts. These exemptions provide a fresh start by folks can and do retain essential property and belongings necessary for a reasonable standard of living and enabling them to rebuild their financial lives after bankruptcy. Here's how exemptions provide a fresh start in bankruptcy: Asset protection: Exemptions typically cover essential assets such as a primary residence, personal vehicles, necessary clothing, household goods, tools of the trade, retirement accounts, certain bank deposits, and public benefits. By exempting these assets, debtors can keep them even after...

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Are Tax Debts Dischargeable in Bankruptcy

The dischargeability of tax debts in bankruptcy depends on various factors, including the type of tax debt, the age of the debt, and the specific bankruptcy chapter filed. Generally, income tax debts may be dischargeable in bankruptcy, but certain criteria must be met. Income tax debts can be discharged in both Chapter 7 and Chapter 13 bankruptcies if they meet the following requirements: The tax debt must be related to income taxes. Other types of taxes, such as payroll taxes are typically not dischargeable. The tax return must have been due at least three years before the bankruptcy filing date. The tax return must...

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How does filing bankruptcy immediately protect you?

The bankruptcy automatic stay goes into effect immediately upon the filing of a bankruptcy petition. It is one of the most powerful features of bankruptcy law and provides debtors with immediate relief from creditor collection efforts. When a bankruptcy case is filed, the automatic stay imposes a legal injunction that halts most types of collection activities by creditors. This means that creditors are prohibited from taking any further action to collect debts, including filing or continuing lawsuits, garnishing wages, repossessing property, or making harassing phone calls. The automatic stay is designed to provide debtors with a breathing space, allowing them to...

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The Automatic Stay Stops All Collections

The automatic stay is a fundamental protection afforded to debtors upon filing for bankruptcy. It serves as a powerful shield, providing the debtor with immediate relief and several key benefits. Here's how the automatic stay protects a debtor in bankruptcy: 1. Halts creditor actions: The automatic stay immediately stops most collection actions and legal proceedings against the debtor or the debtor's property. This includes actions such as lawsuits, foreclosures, repossessions, garnishments, and creditor harassment. The stay ensures that creditors cannot continue their collection efforts or take any further legal action without permission from the bankruptcy court. 2. Provides breathing room: By imposing...

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What is the Bankruptcy Means test

The means test is an important component of the bankruptcy process. Its primary function is to determine whether an individual or household has sufficient financial means to repay their debts, specifically in the context of Chapter 7 bankruptcy. Chapter 7 bankruptcy is a type of bankruptcy that allows individuals or businesses to discharge their eligible debts and obtain a fresh financial start. However, not everyone qualifies for Chapter 7 bankruptcy, as there are income limitations in place to prevent abuse of the system. The means test helps determine eligibility for Chapter 7 bankruptcy by assessing the debtor's income and comparing it to...

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