Crimcheck searches federal bankruptcy courts for federal bankruptcy statuses requesting relief and protection for a debtor from their creditors. We seek out previous or pending bankruptcy filings. This investigation, when combined with the Social Security Trace, determines multiple jurisdictions to be verified. We will report the specific Chapter (see below for chapter descriptions), whether the filing is still currently active, was dismissed, discharged or terminated.
We can find any type of bankruptcy records, including the following:
- Chapter 7 – Liquidation under the Bankruptcy Code for individuals and businesses
- Chapter 11 – Reorganization under the Bankruptcy Code used primarily by businesses
- Chapter 12 – Rehabilitation for family farmers or fisherman only
- Chapter 13 – Individual debt adjustment used for individuals who are employed with a regular source of income.
Interesting Fact: The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13, with Chapter 7 cases accounting for 65% of all bankruptcy filings.
Types of Bankruptcies
Chapter 7: The debtor gives up their property to the bankruptcy trustee who then liquidates it and allocates the profits to the debtor’s creditors. In return, the debtor is discharged of some debt. Generally, the trustee will sell most of the debtor’s assets for this. There are some assets, however, that are protected and not sold. These can include unemployment compensation or Social Security payments, among others. Chapter 7 bankruptcy can only be filed one time within an eight year period.
An individual may not be eligible for this kind of bankruptcy if they fail the Means Test (in this instance, the case may be dismissed or the case may be changed to Chapter 13 bankruptcy.) or if the individual is found guilty of certain behaviors deemed dishonest. These can include concealing financial records and other debts. Furthermore, there are other kinds of debts that are never discharged, including student loans and spousal or child supports.
Chapter 11: This involves primarily businesses. In this case, the debtor (business owner) works with the creditors to reorganize the debts and negotiate the terms of the plan. Once certain requirements are met, the creditors vote on the plan and the debtor will continue to run the business and pay the debts under the plan’s terms.
Chapter 12: This is very similar in structure to Chapter 13, however it specifically applies to fishermen and farmers only. It also offers additional advantages to the debtors different than those available to common wage earners. Some benefits include higher debt ceilings and more advantageous exemptions.
Chapter 13: The debtor maintains possession of their assets however; a repayment plan must be set for the debtor to allocate some of their future income to pay the creditors. This can take place over 3 -5 years. This type of bankruptcy is only eligible for debtors who have an expected income and whose debts don’t surpass prescribed limits. Once all the payments have been made, the debtor will be discharged of all debts.
If the debtor fails to make the arranged payments, the Bankruptcy case will be dismissed and the creditors will recommence their pursuit of repayment of debt.
The debtor’s repayment plan can take place between 3 – 5 years, but may never exceed 5 years. The length of time depends on the debtor’s monthly income; if it is less than the state’s median income the plan will be for 3 years and if it is more than the median income, it will be for 5.
The main difference between Chapter 7 and Chapter 13 is that in Chapter 13, the debtor usually retains their possessions, where in Chapter 7 the debtor must liquidate their possessions.
Federal Bankruptcy Exemptions
Exemptions which allow a debtor to maintain a specific amount of monetary value in property in Chapter 7 bankruptcy and establish the amount of money a debtor must pay the creditors in Chapter 13 bankruptcy.
Most bankruptcy cases require the use of state exemptions, which differ with the state but some states also allow federal exemptions. These two must not be mixed and if a debtor chooses one, they cannot use any of the others.
The states that allow the use of federal exemptions are:
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- Rhode Island
Types of Federal Exemptions:
Federal Homestead Exemption– shields the equity of the place of residence of the debtor up to $21,625. This exemption cannot be used on investment or rental properties.
Personal Property Exemptions– Protects the property a debtor possesses excluding real estate. This includes:
- $3,450 for motor vehicle
- $1,450 for jewelry
- $11,525 total value on household goods
- $2175 for tools of trade
- Health aids
- Life insurance policies which have not matured (exception to this is credit life insurance) and $11,525 in loan value of the policy
Support or Benefit Exemptions– Includes:
- Child support, alimony and other domestic maintenance
- Social Security
- Unemployment benefits
- Veteran’s benefits
- Public assistance
- Illness benefits
Injury Recovery Exemptions– includes:
- $21,625 for personal injury and compensation
- Compensation for being a victim of a crime
Wild Card Exemption– The debtor can be exempt of any property owned at the amount of $1,150 with an additional $10,825 of any leftover exemption funds from the Homestead Exemption.
Retirement Exemption– All retirement accounts which are exempt from taxation are completely exempt.
Terms to Know
Automatic Stay: An order by bankruptcy court to stop creditors collecting debts once a person has declared bankruptcy.
Bankruptcy: A statutory procedure by which a debtor obtains financial relief and undergoes reorganization or liquidation of the debtor’s assets for the benefit of creditors.
Debt Ceiling: The maximum debt limit.
Discharged: Bankruptcy was permitted and the debt was released.
Dismissed: Petitioner did not meet the requirements to complete the bankruptcy process under the specified Chapter.
Joint debtors: Spouses or business partners that file for bankruptcy together.
Judgment: A court’s final determination of the rights and obligations of the parties in a case.
Lien: A legal right or interest that a creditor has in another’s property, lasting usually until a debt or duty that it secures is satisfied.
Means Test: Determines whether the party is eligible to file for bankruptcy. This depends on whether the party has the means to do without the government’s help.
Pending: The bankruptcy is still in process and the next court date will be reported.
Petitioner/Debtor: Party (Individual or Business) requesting protection of bankruptcy
Terminated: Bankruptcy proceedings are completed.
Trustee: Individual appointed by the court to handle negotiations with the debtor’s creditors and to ensure that the debtor complies with the discharge agreement of the bankruptcy. During the proceedings, the Trustee is in charge of the debtor’s finances.