Bankruptcy Myths & Advantages of Chapter 7

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Chapter 7 Bankruptcy has many advantages for those in debt, and this article will debunk many myths the media uses to exploit those who file.  When Americans in debt are provided the choice of filing Chapter 7 (discharge/erase most debt) or Chapter 13 (3-5 year repayment plan), many debtors prefer filing Chapter 7 Bankruptcy.  However, a debtor must qualify by meeting an income limitation, and have limited assets.  Not everyone will lose property such as their motor vehicle, which is a big misconception.  This will depend on the equity of the vehicle, loan balance (if any), and the value of other assets.  There is a certain amount of assets the law allows an individual to keep.  

The debtor receives a “fresh start”. 

The goal of filing a bankruptcy petition is to give the debtor a new, fresh start.  Once the petition is filed the phone will stop ringing, and you can finally begin to relax.  Though the debt isn’t eliminated until the actual discharge date, creditors cannot harass or attempt to collect any debt once the petition is filed.  Keep in mind there are several debts not dischargeable under bankruptcy law, including: student loans (unless the court rules otherwise), child support, alimony, and some taxes.  

The debtor keeps future income.

Property a debtor receives or will receive after filing for Chapter 7 is not included in the bankruptcy petition or estate.  Although, property from a divorce, civil settlement, or inherited property a debtor acquires within 180 days after filing for Chapter 7 (not after discharge) will become part of the bankruptcy estate. 

No maximum debt amounts.

Chapter 7 Bankruptcy laws and rules do not impose a limit on the amount of debt a filer may have.  However, when filing Chapter 13 Bankruptcy, a debtor is ineligible and the court will request you to file under Chapter 7 if secured or unsecured debt exceeds debt limits.

No repayment plan.

The debtor is no longer responsible for repaying the debt after its discharge in Chapter 7.  Once the Chapter 7 Bankruptcy Petition is filed you’re not required or allowed to pay creditors any money you owe them.  

The discharge of debts occurs quickly.

In a typical Chapter 7 case, the discharge of debt occurs within 60 – 90 days.  Debtors should expect the court to issue a discharge order and close the case 60 to 90 days after filing the initial petition.

The Disadvantages of Chapter 13 Bankruptcy

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Only individual debtors are eligible to file Chapter 13, not businesses.

Chapter 13 cannot be utilized if you’re a business owner, regardless of ow large or small the business is.  However, if you have incurred personal liability for business debts, you can file as an individual only.

The debtor must repay all creditors under Chapter 13.

A debtor who files Chapter 13 Bankruptcy is required to repay creditors using a 3-5 year repayment plan.  Furthermore, the debtor must have sufficient income to pay creditors every month in addition to their future monthly bills.  The payment plan consolidates the debt so the payments are manageable.  The debtor must repay priority debts (such as taxes) and secured creditors in full, and repay unsecured creditors (credit card debt) in an amount equal to what those creditors would have received if the trustee had sold the debtor’s nonexempt property in a Chapter 7 Bankruptcy.

Before Filing for Chapter 7 Bankruptcy, Have VAP Bankruptcy Preparer Experts Review Your Situation for Free

Consider getting a free Chapter 7 Bankruptcy evaluation from our VAP Bankruptcy Preparer Experts, by calling 1-203-519-0599.

Can a Paralegal Prepare Bankruptcy Petitions?

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Bankruptcy paralegals may prepare bankruptcy petitions without being under an attorneys supervision.  The debtor must know in advance which bankruptcy chapter they wish to file.  Furthermore, under no circumstances may the paralegal provide legal advice to the debtor.  Paralegals may also work for a bankruptcy attorney in a law firm or from a home office as a freelance Bankruptcy Petition Preparer.

What is a Bankruptcy Petition Preparer?1Chapter7-13

Federal law stipulates how a Bankruptcy Petition Preparer (paralegal) can assist the public with preparing bankruptcy petitions under 11 U.S.C. § 110.  Each state has bankruptcy laws in which must be researched prior to preparing any bankruptcy filing.  Bankruptcy Petition Preparers may not represent a debtor in court, nor provide the public with any legal advice.  Bankruptcy paralegals cannot answer questions such as: Should I file Chapter 7 or Chapter 13 Bankruptcy?  Will all my debt be discharged if I file Chapter 7 Bankruptcy?  If I file Chapter 13…

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Top 10 Paying Paralegal Jobs

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Once you begin your search of paralegal jobs, you want to consider the highest paying ones.  In order to find such positions it’s important to consider location, job duties, and the area of law you’re looking to work within.  Those with a college degree will receive higher salaries than those with no secondary education.  Many schools with good reputations and relationships within their community will even assist you with obtaining employment with a local firm. 

The Bureau of Labor Statistics estimates that the average paralegal salary nationwide is  $52,990 for those with a two-year associate degree.  However, this average salary is amongst all paralegals nationwide, including those in the profession for over 10 years.

For paralegals coming right out of school $25,000 is a good estimate of what to expect for a starting salary.  The good news is within a couple of years statistics show that number going up to an estimated $35,000 a year. 

Just…

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Paralegals in Canada Provide Legal Advice

Paralegals in Canada are not only given more responsibilities per law, but are seen with a higher regard than in the United States.  Canadian law permits a licensed paralegal to handle tasks and provide legal advice to a client in some situations such as:

  • Small Claims Court;
  • Ontario Court of Justice (under the Provincial Offences Act);
  • Summary conviction offences where the maximum penalty does not exceed six months’ imprisonment and /or a $5,000 fine; and
  • Administrative tribunals such as the Financial Services Commission of Ontario.

A person with a Canadian paralegal license can represent a client in any of the above-mentioned proceedings:

  • Provide legal advice concerning legal interests, rights with respect to a proceeding or the subject matter of a proceeding;
  • Draft legal documents for use in a proceeding; and
  • Negotiate on behalf of a person who is a party to a proceeding.

Paralegals in Canada are not permitted to appear in Family Court and may not provide legal services that only a lawyer may provide, such as drafting wills or handling real estate transactions or estates.

American paralegals work hard and receive years of education (majority hold a Bachelor’s Degree) to keep up with their attorney superiors; however, many are still not given the credit they deserve.  Hopefully, in the near future the US will catch up to other neighboring countries.

“VAP Services is a full service legal marketing network providing legal writing, web content management, and executive paralegal services to law firms nationwide.”

Contact VAP Services for all your paralegal needs.

Can a Paralegal Prepare Bankruptcy Petitions?

Bankruptcy paralegals may prepare bankruptcy petitions without being under an attorneys supervision.  The debtor must know in advance which bankruptcy chapter they wish to file.  Furthermore, under no circumstances may the paralegal provide legal advice to the debtor.  Paralegals may also work for a bankruptcy attorney in a law firm or from a home office as a freelance Bankruptcy Petition Preparer.

What is a Bankruptcy Petition Preparer?1Chapter7-13

Federal law stipulates how a Bankruptcy Petition Preparer (paralegal) can assist the public with preparing bankruptcy petitions under 11 U.S.C. § 110.  Each state has bankruptcy laws in which must be researched prior to preparing any bankruptcy filing.  Bankruptcy Petition Preparers may not represent a debtor in court, nor provide the public with any legal advice.  Bankruptcy paralegals cannot answer questions such as: Should I file Chapter 7 or Chapter 13 Bankruptcy?  Will all my debt be discharged if I file Chapter 7 Bankruptcy?  If I file Chapter 13 Bankruptcy can I keep my house?  Will I lose my car if I file any chapter of Bankruptcy?  

Freelance paralegals prepare bankruptcy petitions for debtors who already know which bankruptcy chapter they want to file.  Bankruptcy Petition Preparers request basic personal information from the debtors, tax returns, all three credit reports, tax debt, student loan debt, and any other bills that may not be on their credit report.  The paralegal then uses that information to complete the bankruptcy petition, schedules, exhibits, statements, and other court documents.  Preparers may also request from the debtor, specific documents or information requested by a court Trustee, and submit those documents to the Trustee on behalf of the client.

Bankruptcy_Petition_iStock_000008359066XSmall1What can a Bankruptcy Paralegal handle at a law firm?

Bankruptcy paralegals working at for bankruptcy law firms may perform a variety of tasks related to bankruptcy proceedings.  Some tasks a paralegal may handle for a bankruptcy attorney include:

  • Handling the bankruptcy debtor screening and interview.
  • Gather debtor financial information (old and current bills, tax returns, monthly expense sheet, etc.).
  • Drafting bankruptcy petitions, motions, affidavits, schedules, exhibits, appeals, adversarial pleadings, and any other necessary legal documents.
  • Research and locate specific laws to be used to benefit a debtor or to prove dischargeability.
  • Communicate with creditors and court appointed Trustee on the debtors behalf.
  • Schedule bankruptcy hearings and court dates with the court clerk.
  • Keep a calendar of case deadlines and remind the attorney in advance.

Each Chapter 7 or Chapter 13 bankruptcy case will require the debtor(s), and their attorney to attend a mandatory hearing called the ‘Meeting of the Creditors’ (341 hearing).  Most US Bankruptcy Courts automatically assigned a hearing date after filing the bankruptcy petition.  After the 341 hearing, a bankruptcy paralegal is responsible for scheduling other hearings in order to make sure the attorney is available.

*In the event, a debtor is “pro se” and decides not to hire an attorney, only the debtor is required to attend.  A debtor IS NOT required to hire a bankruptcy attorney.

How Can I Become a Bankruptcy Petition Preparer?

poaAnyone interested in becoming a bankruptcy paralegal or a Bankruptcy Petition Preparer should be able to multi-task, have an eye for detail, work with numbers, and meet deadlines.  If you are serious in becoming a paralegal contact a local business school and regarding their paralegal certification program.  If you would rather attend a college and receive an Associate Degree or Bachelors Degree, many universities now have paralegal degree programs.  The degree you earn will determine the salary amount you receive.  A Bankruptcy paralegal may open a freelancing business from home or decide to work for a law firm.  If you have never seen or prepared a bankruptcy petition before, you may want to read the Federal Bankruptcy Court website for more information and forms.  You will find bankruptcy forms, schedules, and exhibits.  Also some paralegals purchase bankruptcy petition preparation software which can become a bit costly.  Be sure to read your state bankruptcy laws.  Some states cap the amount a non-attorney bankruptcy petition preparer can charge.

“VAP Services is a full service legal marketing network providing legal web marketing, web content management, and executive paralegal services to law firms nationwide.”

VAP.Services.LLC@gmail.com

Phone :  1-203-519-0599

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