2. Bankruptcy

3. What is Bankruptcy?
A federal court process that can eliminate your legal responsibility for many debts or let you replay them over time

4. Common Reasons People File
Medical expenses
Lack of adequate insurance
Over-extended credit
Divorce

5. Chapter 7 Bankruptcy?
“Liquidation” Bankruptcy: removes debts that are not secured by collateral or property/gets rid of most debt
The means test: compares your income to the state median
Requirements
Pre-bankruptcy counseling and education
Copies of tax returns
Certification of credit counseling win in last 6 months
Evidence of earning within the past 60 days
Net income/photo ID

6. What debts cannot be discharged?
Child support
Alimony
Student loans
Legal fines and penalties
Income tax from last 3 years
Luxury items purchased 60 days before filing
Cash advances made 70 days before filing

7. Types of Bankruptcy Chapters 13 (11 similar businesses)
“Reorganization”
Debt payments over 3 to 5 years
Keep property if making payments on time
Some creditors will be paid back in full with interest, others in full and the remainder will be repaid a percentage of the debt.
*Bankruptcy panel decides on debts, not person filing
*Missing a payments can result in liquidation

8. Consequences of Declaring Bankruptcy
Difficulty getting credit, finding a job, getting insurance and renting
Rate 6.25% to 6.50 above prevailing rate
Annual fee credit cards…
Chapter 7 Bankruptcy remains on credit report for 10 years; Chapter 13 remains for 7 years
Costs money to file – chapter 7 more –
family heirlooms, bank accounts, investments, second cars and vacation houses, just to name a few -- will be sold and distributed to your debtors. If the case is dismissed, you will lose all bankruptcy protection and go back to square one, still liable for all your debts.

9. Bankruptcy Facts Average age: 38
Education Level: slightly better than the population at large
Filing status: 44% files as a married couple