Kathleen Michon is an estate planning lawyer in the San Francisco Bay Area. She has been affiliated with Nolo in various capacities for more than fifteen years, including five years as Nolo’s in-house bankruptcy, foreclosure, and debt editor. Kathleen’s previous legal experience also includes directing Public Counsel's Consumer Rights Project and representing inmates on death row. Kathleen received a B.A. from Yale University and a law degree from Northwestern University School of Law.
Articles By Kathleen Michon
When filing for Chapter 7 bankruptcy, many debtors are able to keep most or all of their personal property. What you are allowed to keep depends on what property is deemed "exempt" by your state or the federal bankruptcy exemptions.
Getting student loans discharged in a Chapter 7 bankruptcy case is very difficult. For the most part, you must show that repayment would cause you "undue hardship."
Your spouse’s personal liability for your business debts could also affect your decision about filing for Chapter 7 personal bankruptcy. For instance, if your spouse is liable for your business debts and has assets or income to lose, it might make sense for both of you to file for personal bankruptcy.
Whether you file for Chapter 7 or Chapter 13 bankruptcy, it's important to determine which of your unsecured debts will be classified as priority debts and which will be assigned to the nonpriority category.
Common ways an owner of a corporation or an LLC might become personally liable for the business’s debts. If you are personally liable for some or all of your business debts, you will have to file a personal bankruptcy, rather than a business bankruptcy, to rid yourself of these debts.
In bankruptcy, a preference payment occurs when you repay a creditor within a certain period of time before you file for bankruptcy. If you make a preference payment (also called a preferential transfer), your bankruptcy trustee may be able to get the money back from the person or business you paid – called “avoiding” the transfer.
In Chapter 13 bankruptcy, you must devote all of your disposable income to your Chapter 13 repayment plan.
If you don’t make your payments to the Chapter 13 trustee on time, the court could dismiss your bankruptcy case. So what should you do if you cannot make one or more Chapter 13 plan payments?
When you file for bankruptcy under Chapter 7 or Chapter 13, you must complete a set of schedules that list information about your assets, debts, expenses, income, and financial transactions. On Schedule I, you must provide information about your income. You must also provide information about your dependents.
Filing for business bankruptcy means someone else steps in to liquidate your business’s assets and settle its debts (in this case, the bankruptcy trustee).