Filing for bankruptcy is a legal process and can be carried out in a matter of months to help individuals or businesses who owe more debt than they can pay. Bankruptcy cases cannot be filed in a state court of law, but rather in one of the 94 federal judicial district courts. Alaska has 5 jurisdictions in the state to hear cases of Chapter 7, Chapter 11, Chapter 12, and Chapter 13 bankruptcies.
Types of Bankruptcy and Terms
The first type of bankruptcy, Chapter 7, is a petition to wipe clean financial obligations through a court order to discharge debts in exchange for ownership of the debtor's property. There are many exemptions with Chapter 7; however, a person filing for this type of bankruptcy may lose their home or car to the lending institution if they are behind on payments and the asset is liquidized to cover the debt.
Chapter 11 bankruptcies differ because they are filed by corporations to allow time to restructure debts and allow a fresh start for the defaulting company after it has fulfilled the obligations agreed upon in court.
Chapter 13 is an attractive alternative to Chapter 7 bankruptcy because the individual's assets are not at risk for liquidation as long as the debtor stays within the debt repayment plan of 3-5 years. To file for Chapter 13, a wage earner must have steady income and more money upfront to pay for the additional court costs. Chapter 12 is a similar arrangement to chapter 13, but can offer benefits to specific and additional terms to farmers and fisherman compared to typical petitioners.
In the case of all petitioners of bankruptcy in Alaska, a debtor must undergo credit counseling within six months of filing and is required to fulfill a financial management instructional course obligation after filing.
Steps to Filing Bankruptcy
Following the mandatory credit counseling, a petitioner may complete a Means Test required by the 2005 Bankruptcy Act to determine what type of bankruptcy for which he or she may file. The Means Test compares a petitioner's average income over the last 6 months to the median income for Alaska. If the income is found below the median, he or she may file for Chapter 7. Chapter 13 is the type of bankruptcy filed for those with an income above the median for Alaska.
The next step for filing is to gather paperwork of all major transactions over the last 2 years, a monthly list of living expenses, the secured and unsecured debts incurred, and all assets and possessions. Along with these documents, it is important to have the deeds to any real estate, titles for vehicles, and tax returns for at least 2 years.
Before filing, it is imperative to also determine what property is exempt under Chapter 7 and Chapter 13 bankruptcy. This can be done with the help of an attorney or by the individual filing for bankruptcy. Then it is time to file the petition along with necessary forms to the Alaska District Court. The fee for filing the documentation, also known as "schedule", is $306 for Chapter 7 and $281 for Chapter 13. The fee for Chapter 7 can be waived or paid in installments, but Chapter 13 cannot.
If filing Chapter 13, there is also a required repayment plan that must be submitted at this time. Generally, the payments are garnished from future wages for a minimum of 3 years to repay debt. At this time an Automatic Stay goes into effect so creditors and debt collectors are not able to make direct contact with the individual filing bankruptcy and any foreclosure proceedings are halted.
Location Specific Information
The United States Bankruptcy Court District of Alaska holds offices in Anchorage at 605 W. 4th Ave, Suite 138 Anchorage, AK 99501; in Fairbanks located at 101 12th Ave, Room 332 Fairbanks, AK 99701. Lastly there is an office in the state capital at 709 W. 9th Ave, Room 979 Juneau, AK 99802.