About Bankruptcy...
Two basic approaches are taken toward personal bankruptcy - Chapter 7 and Chapter 13. The decision to file one or the other can be a complicated one; be sure your attorney takes the time to explain the difference to you.
Chapter 7 OverviewChapter 7 of the United States Bankruptcy Code is designed to provide a Fresh Start for individuals who are overcome with debts that they are unable to repay without significant hardship. A Chapter 7 Discharge eliminates unsecured debts (debts not secured by an asset that can be foreclosed on or repossessed by a creditor). It does not eliminate secured debts (such as car loans or home mortgages) and special arrangements may have to be made in order to retain certain secured assets. Not everyone is eligible to file for Bankruptcy under Chapter 7. There are several eligibility requirements that must be met under the 2005 revisions to the Code. However, despite many rumors, most people who would benefit from Chapter 7 are actually eligible to file for Bankruptcy protection under it! A typical Chapter 7 Bankruptcy normally takes approximately three to four months from the date of filing to the date of final discharge of claimed debts, although some cases may take longer. Once the case is filed with the federal court, creditors cannot contact the debtor or take any other action in order to collect from the debtor without court approval. Chapter 7 may be a viable option for debtors with lower than average annual incomes who own few assets and whose debts are comprised primarily of the following:
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Chapter 13 OverviewChapter 13 of the United States Bankruptcy Code is designed to allow debtors to reorganize their finances in order to retain secured assets and to ultimately repay at least a portion of their unsecured debts. A Chapter 13 Bankruptcy involves a Repayment Plan that includes payment of all past due and ongoing current payments owed to secured creditors for the assets retained by the debtor. Unsecured creditors usually receive at least a small portion of their owed balances. The plan lasts for three to five years and, during this time, payments are made to a Trustee that is assigned to the case, usually through garnishment of the debtor's disposable income. For the duration of the plan, no creditor can make any attempt to foreclose, repossess, or otherwise collect secured assets accounted for in the plan. Due to the necessity of a repayment plan, the debtor must have a regular source of income - at least enough to facilitate past and present obligations to secured creditors and ongoing expenses. Chapter 13 Bankruptcies can be complicated and it is important to get all the facts in order to determine if it will help in your particular situation. For this reason, it is essential that you contact our office to set up a FREE Initial Consultation. We can discuss your options in detail and whether Chapter 13 is right for you. |
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