The date of cleavage is the date when a voluntary bankruptcy petition is filed. This date serves as a critical cutoff point for determining which debts can be discharged in bankruptcy. Only debts that exist as of the date of cleavage may be eligible for discharge, although there are certain exceptions to this rule.
The date of cleavage is primarily used in bankruptcy law. It is essential for individuals or businesses filing for bankruptcy to understand this date, as it affects their financial obligations. Users may encounter this term when completing bankruptcy forms or navigating the bankruptcy process. Tools like US Legal Forms provide templates to assist in filing for bankruptcy, ensuring that users can manage their legal needs effectively.
Here are a couple of examples of abatement:
Example 1: John files for Chapter 7 bankruptcy on March 1. Any debts he had before this date are subject to discharge, while debts incurred after this date will remain his responsibility.
Example 2: Sarah files for bankruptcy on June 15. She had a credit card debt from June 10 that may be discharged, but a loan taken on June 20 will not be affected by her bankruptcy filing. (hypothetical example)
Examples of state differences (not exhaustive):
| State | Notes |
|---|---|
| California | Allows certain exemptions that can affect dischargeability. |
| Texas | Has specific rules regarding homestead exemptions that may influence the date of cleavage. |
| New York | Follows federal bankruptcy rules but has unique state-specific exemptions. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Key Difference |
|---|---|---|
| Discharge | The elimination of a debtor's obligation to pay certain debts. | Discharge refers to the outcome of bankruptcy, while date of cleavage is the point in time that determines eligibility. |
| Bankruptcy Filing | The formal submission of a petition to declare bankruptcy. | The filing date is when the date of cleavage occurs, marking the start of the bankruptcy process. |
If you are considering filing for bankruptcy, it is crucial to understand the date of cleavage. Gather all relevant financial documents and consult with a legal professional to ensure you understand your rights and obligations. You can also explore US Legal Forms' templates to assist with your filing process. If your situation is complex, seeking professional legal help is advisable.
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Debts incurred after the date of cleavage are not eligible for discharge and must be paid by the debtor.