7/29/2019 Lifecycle of Bankruptcy

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Life Cycle of BankruptcyC 7, 11, 13

General notes:

1.CreditorsorPartnerscanleaninvoluntarypeonaskingthecourtto

placetheDebtorinbankruptcyagainsthis/her/itswill.

2.Anysaleornancingofrealpropertyissubjecttotheapprovalofthe

BankruptcyCourt.

3.JudgementsandLiensremainaachedtothepropertyunlspecically

releasedbyanordertosellthepropertyfreeandclearofspecicliens

andjudgements;oranorderavoidingthespeciclienorjudgement,

whichcouldbelimitedtotheamountofthehomesteadexemponand

thereforesllaachtothepropertyfortheamount,ifany,inexcessof

thehomesteadexempon.

4.Warning!Thischartisintendedasageneraloverviewoftheprocess.

BankruptCy petition filed By deBtor in u.s. BankruptCy Court

DebtorlesSchedulesofAssets&Liabilies,Income&Expenses.InChapters7&13,aTrusteeisappointedbyCourttomarshalassets

automatiC stay

AlllegalproceedingsagainstDebtororDebtorspropertyarestayedorfrozen

automacallyuponlingofbankruptcypeon.(e.g.allforeclosures,evicons

&suitsforcolleconsstopunlspecicallyauthorizedtoproceed.)

proof of Claim

CreditorsleProofofClaimstangnatureandamountofdebtowedbydebtor.(Failureto

lebeforedeadlinemayjeopardizecreditorsclaim).Deadlinesdierinchapter7,11,13.

personal deBt is disCharGed

e.g.:Creditorsowed$30k-Trusteesellsassetsandnets$3,000.

Creditorspaid10%.Balanceofdebtisdischargedunlesscreditors

challengedischargeinlegalproceedings.JudgementsandLiens

arenotaectedandremainaachedtopropertyunlspecically

releasede.g.anordertosellfreeandclear.

disCharGe

CourtissuesorderofDischarge,ifappropriate.

Case Closed

plan Completed

CreditorspaidsomeorallinaccordancewithPlan.

UponPlancompleon,CaseClosed

fresh start

FreshstartinChapter7,13:Individualdebtorsnolongersaddled

withdebt;however,creditreportshowbankruptcyforupto10

years.Insomecases,Chapter11debtorsmayalsogetadischarge

reorGanization plan Chapters 11 & 13

DebtortriestofullyorparallysasfyCreditorsbymakingpaymentsor

restructuringnances.Planmustbeapprovedbycourtandcreditors

mayobject.Courtdesignatesagenttosalvageassets,restructuredebt

(e.g.modifytermsofnotes),makeproratapaymentstocreditors,oer

stockinexchangefordebtbyfollowingthePlan.

Creditors meetinG

Debtormaybeexaminedunderoathregardingassetsandliabilies.Creditorsareinvitedtoaendandmayasklimitedquesons.Ifthesubjectproperty

isclaimedexemptashomesteadpropertyintheoriginallingandtherearenoobjeconsintheMeengofCreditors,fortleinsurancepurposes,we

considerthepropertyfreefromthejurisdiconoftheBankruptcyCourt,andabsentanybankruptcycourtorderstothecontrary,canbesoldwithout

orderofthecourt.Thepropertyremainssubjecttoallliensandjudgementsofrecord.

relief from automatiC stay

Acreditorwhosecolleconeortshavebeen

stayedmayaskthecourtforrelieffromautomac

stay.Oncereliefhasbeengrantedortheme

limitexceeded,itmayproceed.

liquidation reorGanization

Chapter 7

Debtorgivesuptryingtopaydebts.Turnsover

non-exemptassetstoTrustee&Trusteesells

assetstopayCreditors.

Chapter 11

ForCorporaons,Partnerships,&LLCs.

Connueinoperaoninaccordancewith

plan;Creditorsvoteonplan.

Chapter 13

ForIndividuals;referredtoas

WageEarnersBankruptcy.