TYPES OF BANKRUPTCY RELIEF AVAILABLE TO

CONSUMER DEBTORS

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Chapter 7: Liquidation

In General......

Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay

their existing debts.

When you file for relief under Chapter 7 of the Bankruptcy Code, a trustee is appointed to

take over your property.  In most cases, you will be able to claim certain of your property

as exempt under governing law, but the trustee will have the right to take possession of and

sell the remaining property that is not exempt and use the sale proceeds to pay your

creditors.  If all of your property is exempt, there will be no property for the trustee to sell. 

Your attorney can advise you as to what property is considered exempt under governing

law, and what property is subject to sale by the trustee.

The purpose of filing a Chapter 7 case is to obtain a discharge of your existing debts.  A

discharge is a court order which states that you do not have to pay most of your debts.  The

discharge only applies to debts that arose before the date you filed.  You may only receive

a discharge of your debts under Chapter 7 once every eight years.

Limitations to Relief......

You should be aware that even if you receive a general discharge under Chapter 7, some

particular debts are not discharged under the law. You may still be responsible for most

taxes and student loans; debts incurred to pay nondischargeable taxes; domestic support

and property settlement obligations; most fines, penalties, forfeitures, and criminal

restitution obligations; certain debts which are not properly listed in your bankruptcy

papers; and debts for death or personal injury caused by operating a motor vehicle, vessel,

or aircraft while intoxicated from alcohol or drugs.

Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft,

or from a willful and malicious injury, the bankruptcy court may determine that the debt is

not discharged.  Moreover, if, you are found to have committed certain kinds of improper

conduct described in the Bankruptcy Code, the court may deny your discharge and, if it

does, the purpose for which you filed the bankruptcy petition will be defeated.

Qualifications for Filing Chapter 7......

Debtors whose debts are primarily consumer debts are subject to a "means test", which is

designed to determine whether the case should be permitted to proceed under Chapter 7.  

If you file a Chapter 7 case and your income is greater than the median income for your

state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case. It is up to the court to decide whether the case

should be dismissed.  Your attorney can help you determine whether you qualify for

Chapter 7 relief under the means test.

COURT COSTS*:  $245 filing fee, $39 administrative fee, $15 trustee surcharge:

                                 Total fee $299

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Chapter 13: Repayment of All or Part of your Debts

Chapter 13 is designed for individuals with regular income who would like to pay all or

part of their debts in installments over a period of time. You are only eligible for

Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy

Code.  In most cases, you can avoid liquidation of your assets by filing under Chapter 13

and paying all of the required installments.

Under Chapter 13, you must file a plan with the court to repay your creditors all or part of

the money that you owe them, using your future earnings.  The period allowed by the court

to repay your debts under the plan may be three years or five years, depending upon your

income and other factors. The court must approve your plan before it can take effect. 

Your attorney can advise you as to the requirements of a plan that will meet court approval.

After completing the payments under your plan, your debts are generally discharged,

except for domestic support obligations; most student loans; certain taxes; most criminal

fines and restitution obligations; cer tain debts which are notproperly listed in your

bankruptcy papers; certain debts for acts that caused death or personal injury; and

certain long term secured obligations.

COURT COSTS*: $235 filing fee, $39 administrative fee: Total fee $274

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Chapter 11: Reorganization

Chapter 11 is designed for the reorganization of a business but is also available to

consumer debtors. One of the most common reasons consumer debtors file for relief

under Chapter 11 is that their debts exceed the limit allowed under the Bankruptcy

Code for filing under Chapter 13.  The provisions under Chapter 11 are quite

complicated, and any decision by an individual to file a Chapter 11 petition should be

reviewed with an attorney.

COURT COSTS*:  $1000 filing fee, $39 administrative fee: Total fee $1039

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Chapter 12: Family Farmer or Fisherman

Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a

period of time from future earnings and is similar to Chapter 13. The eligibility

requirements are restrictive, limiting its use to those whose income arises primarily from a

family-owned farm or commercial fishing operation.

Court costs*:  $200 filing fee, $39 administrative fee: Total fee $239

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* Court costs Do NOT Include Attorneys Fees.

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Credit Counseling Requirement

With limited exceptions, the Bankruptcy Code requires that all individual debtors

who file for bankruptcy relief on or after October 17, 2005, receive a briefing that

outlines the available opportunities for credit counseling and provides assistance

in performing a budget analysis. The briefing must be given within 180 days before the

bankruptcy filing. The briefing may be provided individually or in a group (including

briefings conducted by telephone or on the Internet) and must be provided by a nonprofit

budget and credit counseling agency approved by the United States trustee or bankruptcy administrator.

In addition, after filing a bankruptcy case, an individual debtor generally must

complete a financial management instructional course before he or she can receive

a discharge.