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Bankruptcy Chapter 7 v. Chapter 13

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For most once they decide to file bankruptcy the decision comes down to which Chapter they will be filing.  Both chapters are beneficial in their own way.  Many factors play into which chapter you will file.  Your income and assets are the main considerations.  Your attorney will discuss with you the process and your best option.

BANKRUPTCY TIMELINE

In Ohio a typical Chapter 7 bankruptcy lasts about six months from the day you see us until you receive your discharge.  Your  meeting date which is called a “341 Meeting” will be four to five weeks from your filing date. These are currently held by phone at our office.  In Chapter 13 expect to be in the case for a period of three to five years as this time period is mandated by federal law.  Once your complete your Chapter 13 you will receive your discharge.

PAYMENT OF DEBTS

In bankruptcy debts are classified into basically two groups – unsecured debts (credit cards, medical debts, loans) and secured debts (houses, cars, anything secured by collateral). There is also a sub-category of unsecured loans which are called priority debts. Student loans and tax debts fall into this category.  In Chapter 7 you will be able to discharge all of your unsecured debts and not have to pay anything back. Student loans and most taxes will likely survive the case.  As to secured debts that you want to keep (such as your home or vehicle) you continue to make your payments and sign a reaffirmation agreement within the case.

Chapter 13 is a re-payment plan.  Under this re-payment plan you will pay all of your debts with a single payment to the Chapter 13 Trustee once a month.  Out of this monthly payment the trustee may make your regular house payment.  Home payments in arrears are caught up through your Chapter 13 payment.  Vehicle payments will also be paid through the trustee. You will pay back a percentage of your unsecured debts.  This percentage is based on several factors and can range from 1 percent to 100 percent.  The debts will be paid in order of priority.  So basically in a Chapter 13 you have one payment a month to the Chapter 13 office.

ASSETS

In Chapter 7 if you are not current on your home the lien holder will require that you get current or they may file for Relief from Stay which, once granted, will allow them to foreclosure.   However, if you are current on your home Chapter 7 is not a problem, just continue to make your payments and you may reaffirm the debt. An single individual has a home equity exemption from creditors and the bankruptcy court of $145,425 ($290,650 for a married couple).

Chapter 13 is designed to help you save your home if you are behind on your payments.  Under Chapter 13 you will have three years to make up your missed payments.  Delinquent car payments may also be made up in a Chapter 13.

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Call today to set up your free consultation to find out which bankruptcy chapter is best for you. We have represented 1000’s of clients over 30 years. We’ll make the bankruptcy law work for you!

Bankruptcy & Foreclosure

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FACING FORECLOSURE? WE CAN HELP!

Job loss, a medical emergency or any number of other issues can cause you to fall behind on your mortgage payments. A mortgage company usually will not start a forclosure until you get about 3 to 4 months behind on your mortgage.  Once a foreclosure is started it will take approximately 6 months for it to complete.  In foreclosure your home will be auctioned and transferred out of your name.  But you can stop this process.

The problem that caused you to get behind may now be resolved but you may still be behind on your mortgage.  Your mortgage lender will almost want all delinquent funds paid in a lump sum before stopping the foreclosure.  Most people are not able to come up with this large sum of money. A chapter 13 will stop the foreclosure and force your mortgage holder to accept back payments over a three year period.

If you are considering withdrawing retirement savings to save your home STOP! This could be a very costly mistake. First, schedule a free consultation with one of our attorneys to discuss your options.

CHAPTER 13 BANKRUPTCY CAN HELP

Once you are behind on your mortgage almost all lenders want all the back payments paid at once.  Few people have these funds available.  This is when you need to consult with a bankruptcy attorney.  Chapter 13 bankruptcy is available.  Chapter 13 can save your home. Once you are under the protection of Chapter 13 your mortgage company must stop all foreclosure proceedings.  Through your bankruptcy case you will have 3 years to pay back the arrears to your mortgage lender.  Your mortgage company must comply with these rules and must stop the foreclosure.

As to your unsecured debts, Chapter 13 can help you with that too. You will be only paying back a percentage of your unsecured debt and at no interest.

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If you are struggling with your mortgage or other debts call us today.  We offer a free consultation, fair fees and monthly payment plans.  We can help you get out of debt and save your home.

Debt Consolidation, Debt Management, Debt Settlement vs. Bankruptcy- Which Way is Best?

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Are you struggling with debt?  Many Americans struggle with debt every year. Looking for the best way out of debt can be exhausting and time consuming.  The most common ways out of debt are debt consolidation, debt management, debt settlement, do it yourself, and bankruptcy. As to debt consolidation, management and settlement companies, be careful, there are many unreliable and even predatory companies that will take advantage of you. We advise you to consult with a knowledgeable attorney before you decide.

DEBT CONSOLIDATION

Debt consolidation may mean getting a new loan to pay off your existing debts. The term “consolidate” means to group several things together into one. Doing this may lower your monthly payment and interest rate.

The problem with debt consolidation is you have not reduced your amount of debt, you have simply lumped all of your debt into one loan with one payment.  You are still accruing interest on your high balance and it may take years to pay off this loan.

 

DEBT MANAGEMENT

A debt management plan is a program offered by companies or non-profit groups that say they will help you negotiate a new payment plan with your current creditors.  The debt management company may negotiate your debts with your creditors and you will make a monthly payment to them directly on your behalf.

There are several problems with these debt management plans. Unfortunately, not all of these companies are honest about what they are selling and how they distribute your funds.  We have had many clients tell us that they paid one of these companies for years without ever seeing their balances go down.

 

DEBT SETTLEMENT

Debt settlement occurs when you work directly with your creditors for lower payments or amounts due. Usually, you must have that full amount to immediately pay. This can be good if you have the funds to pay.

Even if you do have the funds for debt settlement, not all creditors will work with you.  Creditors who do reduce your debt will send you a 1099 tax form and the forgiven amount is treated as income to you.  You will likely owe the IRS a part of the savings of debt settlement.

 

DO IT ON YOUR OWN

If you don’t have much debt and can tighten up on your expenses for a short period of time then this can work.  Start by paying extra on your high interest debt while paying minimum on other debts. When that debt is paid off then snowball the funds into the next highest interest debt.  This is not an option if you can only make minimum payments.

 

BANKRUPTCY IS OFTEN THE BEST OPTION

There are hundreds of thousands of bankruptcies filed in the US each year.  Most are filed by families.

Bankruptcy is often the fastest and easiest way out of debt.  Creditors can refuse to participate in consolidation and debt management cases but they cannot refuse to participate in a bankruptcy. Bankruptcy filing will stay on your credit report for up to 10 years, but all of the options above will affect you for about the same amount of time.  The key to credit after bankruptcy is paying all your debts on time, and careful consideration of any future debt. You will be able to get new credit rather quickly if that is what you desire and can afford. Under federal bankruptcy protection you can protect your assets and wipe out your debts.  There are no negative tax implications for discharging debt in bankruptcy.

MORE INFORMATION

Call 513-752-3900 today for your free consultation with an experienced attorney and then decide for yourself if bankruptcy is your best way out of debt. Keegan & Company Attorneys is located in Eastgate and Middletown, Ohio. Since 1992, our experienced lawyers have helped people protect their hard earned assets and wages and obtain relief from overwhelming debt. Our office helps consumers get financial relief through the use of Bankruptcy.

Bankruptcy -Protect Your Hard Earned Assets AND Eliminate Overwhelming Debt

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Since 1992, our office has helped thousands of people protect their assets and eliminate overwhelming debt. Job loss, divorce, a medical emergency or other catastrophic events are usually why people see us.  Millions of people have used the U.S. bankruptcy laws to get a fresh start.  There are several myths about bankruptcy.

I WILL HAVE TO GIVE UP MY HOUSE AND CAR

The bankruptcy law provides for generous exemptions. Everyday, our clients use legal exemptions to protect their home and vehicles. Sit down with one of our attorneys to learn how your assets can be protected.

BANKRUPTCY WILL RUIN MY CREDIT FOREVER

Bankruptcy stays on your credit report for up to 10 years, but once the slate is clean after bankruptcy, you can start to rebuild your credit. In fact, many people enjoy stronger credit scores after filing. Bankruptcy clears debt and gives a fresh financial start. You are a better credit risk to many creditors after bankruptcy with your unsecured debts eliminated. You will be surprised at the amount of credit card offers you will receive after your bankruptcy filing.  Creditors are willing to extend credit because they know you are debt free and cannot file again for some time.  Keep in mind these offers will initially have high interest and fees. We recommend that you consider your budget, long term goals and needs carefully before taking on any new debt. Bankruptcy has helped millions of Americans get out of debt and bankruptcy can help you too.

BANKRUPTCY IS EXPENSIVE

Many people believe that bankruptcy will be too expensive.  Bankruptcy is not free, but the fee is small compared to the amount of debt you will be discharging.

MORE INFORMATION

The office of Keegan & Company Attorneys offers a free consultation with an experienced attorney and discuss your unique situation. Our attorneys will go over all of your options and quote you a fee.  Our offices are conveniently located in Eastgate and Middletown, Ohio.  Call 513-752-3900 to set up your free consultation appointment.