When You Need An Emergency Life Raft

When You Need An Emergency Life Raft

Your house is being auctioned off tomorrow. Your wages are going to be garnished from Friday’s paycheck. A creditor is about to file a judgment lien against your property. Your car is going to be repossessed this weekend.

It is almost never a good idea to file an emergency bankruptcy if you can avoid it; however there are situations like the ones above that we would consider emergencies when it comes to the need to file for bankruptcy. If you have debt problems and are facing the imminent threat of foreclosure, garnishment, repossession, or other creditor actions, you may need to consider filing an emergency bankruptcy petition.

Filing for bankruptcy enacts the automatic stay, a legal injunction that immediately stops creditors from taking action against you. The stay goes into effect as soon as the petition is filed with the bankruptcy court. For example, if you are behind on your car payments or mortgage payments and you file for bankruptcy, the car loan lender won’t be able to repossess your vehicle, and your mortgage company will not be able to foreclose, at least temporarily. There are exceptions and limits to the automatic stay.

Under non-emergency circumstances, when you file a bankruptcy petition there are several forms you are required to file with the bankruptcy court. Assembling all of the information and filling out the forms can take some time, possibly more time than you have in one of the above scenarios. Instead, you can file just a few of those forms to get the case started.

Chapter 7 Emergency Bankruptcy Filing

Filing for bankruptcy requires you to take a court-approved credit counseling class unless you are disabled, physically impaired to the extent that you cannot take a class, or in an active combat zone. This class is typically available online and often can be taken over the phone or in person. After you take the class and pass a short quiz, you will receive a certificate of credit counseling that must be dated at least a day before the date of your bankruptcy filing.

In order to start your case and get the benefit of the automatic stay, you must file, at a minimum, the following documents: voluntary petition, creditor matrix with verification, and certificate of credit counseling, if applicable, and Exhibit D. You will also have to pay a filing fee of $335.

  • Voluntary Petition. This is a three page document that contains your personal information and a summary of the information in your case, such as the approximate amount of your debt and the number of creditors.
  • Creditor matrix. This is a list of all of your creditors and any other party that you have to notify about your bankruptcy.
  • Exhibit D. On this form, you tell the court that you understand the credit counseling requirement. You must either attach a certificate of credit counseling or include the reason why you are not required to take the course.

After you file the initial forms, you have 14 days to complete and file the remaining bankruptcy forms. If you have not filed the remaining forms after 14 days, you can file a request for more time with the bankruptcy court. If the court approves this, you will receive a new deadline. If you miss the first deadline without asking for more time or you miss the second deadline, the court will dismiss your bankruptcy case.

Chapter 13 Emergency Bankruptcy Filing

You have the same credit counseling requirements as in a Chapter 7 bankruptcy. You have to file the same forms as required in an emergency Chapter 7 bankruptcy, but the filing fee will be $310.

Just like in a Chapter 7 emergency filing, you have 14 days to file the rest of your Chapter 13 bankruptcy forms, including your Chapter 13 repayment plan. You must make your first plan payment to the Chapter 13 trustee within 30 days of your initial emergency bankruptcy filing, even if you get extensions to file your other forms. If the first payment is not received in time, the Chapter 13 trustee can ask the bankruptcy court to dismiss your bankruptcy case.

Filing for bankruptcy is a big deal, and bankruptcy law requires you to fully, accurately, and honestly disclose all of your assets, debts, income, expenses and various other financial information. Filing a petition also triggers various deadlines and “next steps.” If you file a bankruptcy too hastily, you may make mistakes that could cause you difficulty later, including the dismissal of your case or a denial of your bankruptcy discharge.

This is why it’s so important to make sure that filing for emergency bankruptcy is the right thing to do in your unique situation.

If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process.  We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner.  Our bankruptcy lawyers have more than 50 years combined experience and are here to help. Call us today at (423) 690-7712 or drop us a note here.

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