STRUGGLING WITH DEBT?
You have tried but the struggle is never ending. It seems as soon as you start to get ahead something else comes up and gets you behind. Bankruptcy may be the answer to your financial troubles. In most cases, bankruptcy can help get rid of debts and set you on the path to a fresh financial start.
Chapter 7 and Chapter 13 are the most common consumer chapters. Each chapter has its own rules. To find out more, meet with a knowledgeable attorney who will advise which path is best for you.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is also referred to as straight bankruptcy or liquidation bankruptcy. This chapter is available for most consumers. Under Chapter 7 Bankruptcy protection you discharge all unsecured debts under the bankruptcy code. A discharge is a document issued by the federal court which deems your debt non-collectable by creditors. Once you file for Chapter 7 protection all collection practices by creditors must stop. This includes but is not limited to phone calls, mail harassment, court proceedings and garnishments.
Chapter 7 is sometimes referred to as a liquidation bankruptcy because the Chapter 7 Trustee may take some of your assets and sell them to pay your debts. However, people are happy to learn that they can protect and keep most of assets through exemptions provided by the bankruptcy law. Call our office today for your free consultation to discuss your individual situation.
In Chapter 7 Bankruptcy you will be able to keep your home and vehicle. You must however, be current on your payments on these assets if you wish to keep them. The creditor will have a reaffirmation agreement for you to sign and this will deem the debt non-discharged through the bankruptcy. This document will also guarantee that the creditor will continue to report your payment history to the credit reporting agencies, thus rebuilding your credit after the bankruptcy filing.
As many as 65% of consumer filings in the US are Chapter 7 Bankruptcy filings.
Chapter 7 is sometimes referred to as a liquidation bankruptcy because the trustee may take some of your assets, but most bankruptcy attorneys refer to Chapter 7 as a simple or straight bankruptcy, because most assets are covered protected under state regulated exemptions.
CHAPTER 13
Chapter 13 bankruptcy is designed for those who are over the income limit for Chapter 7 or are behind on their home or vehicle and prefer to keep these assets. Chapter 13 can be a solution for people who want to pay their debts but just can’t make the minimum monthly payments. Chapter 13 is a re-payment plan in which you pay back between 1% to 100% of your debts (depending on your individual circumstances). An unsecured creditor cannot charge you interest during a Chapter 13. Once you complete your case you will be receive you discharge and all debts will be discharged.
Chapter 13 bankruptcy also referred to as “a wage earner plan”, allows you to retain ownership and possession of assets that you wish to keep. You may also choose to surrender assets through Chapter 13. To qualify for a Chapter 13 Bankruptcy you must have income to support the case as you will be making monthly payments to the Chapter 13 Trustee who will then disburse these funds to pay your creditors. It is up to the creditor in a Chapter 13 Bankruptcy to file a claim in order to be paid.
Chapter 13 can stop a foreclosure. If you are in foreclosure and want to save your home you can file a Chapter 13 and stop the foreclosure. Your mortgage holder cannot object to your bankruptcy filing and must file a claim in your case to be paid. Chapter 13 generally lasts for a three to five year period. During this time you will be able to make up all your missed payments and the Trustee will disburse your regular house payment. This is a good thing because at the end of your case the trustee will file a notice with the Court that all payments are current and deems that your mortgage holder cannot come back on you for additional fees incurred while you were under bankruptcy protection.
If you are behind on your vehicle, Chapter 13 can also stop repossession and give you time to make up the missed payments over the three to five year period.
AFTER DISCHARGE AND ON THE PATH TO A FRESH FINANCIAL START
Once you receive your discharge creditors can no longer collect on these old debts. They cannot send you a bill, they cannot call you, they cannot take you to court, they cannot garnish your wages. You will be free and clear from these debts and on the road to a fresh financial start! As a result, you can re-build your credit and move forward. Most importantly, you should make all payments for debts on which you reaffirmed “on time” and seriously consider your budget before taking on future debt. Certainly, your credit will improve in no time.