What is an emergency bankruptcy petition? Does it apply to you? If you need quick relief from creditors, you might want to consider an emergency bankruptcy petition.
Understanding the Emergency Bankruptcy Petition
Emergency bankruptcy refers to getting bankruptcy protection without going through the full process of completing all the required forms. You might not have the time to put a full bankruptcy filing into play, but if you file just a few forms and take a credit counseling course, you can buy an extra 14 days for yourself to file the full bankruptcy paperwork with the courts.
The emergency petition can stop your foreclosure. If you’ve gotten a foreclosure notice from the bank, read it over very carefully so you can determine the process and date of your foreclosure sale. For the most part, the state must give you plenty of time and provide a statutory period before they can set a date for a foreclosure sale. The exact amount of time can vary from state to state, but your notice should identify it.
As soon as you file the emergency bankruptcy petition, your lender cannot move forward with the sale as an automatic stay takes effect. Bankruptcy can continue to delay or stop foreclosure. However, when the lender sells the property, you don’t own it anymore, and you can’t use bankruptcy to get it back.
Understanding Qualifications for Emergency Filing
For a Chapter 7 emergency filing, you will need to pass a means test that will determine whether you make too much money to file for bankruptcy or whether you have the means to pay your debts. If you pass the means test, you can file for bankruptcy.
The test will compare your income to the median income across the nation, based on your gross income rather than your net, and review your income sources over the relevant period. It will then account for your various expenses and determine if bankruptcy is a valid option for you.
Even if you plan to file Chapter 13, it could be a good idea to take the means test so you know exactly where you sit. The test can help you to make the right choice.
Be Aware of Exceptions to the Automatic Stay
While Chapter 7 or Chapter 13 bankruptcy triggers an automatic stay, two important exceptions exist that can cause you problems. Both relate to previous filings. If you have had a prior bankruptcy case dismissed over the last year, the automatic stay can last only for 30 days. If you have had more than one such case dismissed within the previous year, you get no automatic stay at all. These exceptions exist to stop people from repeatedly filing for bankruptcy to avoid paying debts.
In addition, the lender can file a motion to lift the stay unless you can show one of the following to be true:
- Foreclosure is illegal.
- The lender hasn’t fulfilled procedural requirements from the state.
- The lender hasn’t proven their authority.
- You have substantial equity that’s not possible to protect using an exception.
Know What You Need To Do
The process for filing an emergency bankruptcy has a lot of requirements and essential timeframes to hit. It is crucial to clearly understand the terminology, the process, and what you can expect. Give yourself time to complete the paperwork for a full bankruptcy by understanding how to file an emergency bankruptcy. Follow the guidance above to get started.
If you are experiencing financial troubles, do not feel like you are out of options. Individuals may qualify to file for bankruptcy.
Contact us today to schedule a consultation.