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BANKRUPTCY CH 7 VS. CH 13

 

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.  Many prefer to Chapter 7 but may not qualify.

BANKRUPTCY TIMELINE

In Ohio, a typical Chapter 7 bankruptcy lasts about six months from the day you file until you receive your discharge.  Your court date is called a “341 Meeting of the Creditors” and will be four to six weeks out from your filing date.  For Chapter 13 you will also have a 341 Meeting of Creditors about four to six weeks after your filing date.  Once you file for Chapter 13 expect to be in the case for a period of three to five years.  Once your complete your Chapter 13 you will receive your discharge.

PAY BACK OF DEBTS

In bankruptcy debt is classified in two groups.  Your unsecured debts (credit cards, medical debts, loans) and your 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.  If you file for Chapter 7 you will be able to discharge all of your unsecured debts and not have to pay anything back.  Most unsecured debts can be discharged but student loans and most taxes will survive the case.  Any secure debts that you would want to keep (such as your home or vehicle) you would continue to make your payments on 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 payment the trustee may make your regular house payment and catch up outstanding back payments on your home.  If there is a vehicle payment involved this will also be made by 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 and your utilities to pay during the duration of the case.

ASSETS

One big benefit of Chapter 13 is you will not have to worry about losing any of your assets in the case.  You keep all of your assets that you wish to keep.  In a Chapter 7, is also referred to as a liquidation bankruptcy because the trustee may take some of your assets and liquidate them to gain funds to pay your creditors.  However, most people do not have to worry about asset liquidation because in Ohio the high exemptions can be protect most assets.

In regard to your home, if you want to qualify for a Chapter 7 you must be current on your mortgage payment to keep your home.  If you file Chapter 7 and 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 they can begin the process of foreclosure.

Chapter 13 is designed to help you save your home if you are behind on your payments.  Under Chapter 13 you will have the three to five year period to make up your missed payments through the case.  The trustee will also make your regular house payment and at the end of the case the trustee will certify that all payments are current.

 

BANKRUPTCY AND DIVORCE

 

It’s not uncommon for someone to file for bankruptcy after a divorce. You or your ex-spouse may not be able to keep up with payments on credit cards and other debts on a single salary. It happens, and it’s a legitimate reason to look for relief through bankruptcy.

Money is a big stress factor in many relationships. Sometimes a couple that has money problems will think that the answer to their problems is divorce. Each spouse is likely to believe that the other is mostly responsible for the couple’s money problems. This belief may or may not be true. One thing is true, you can divorce your spouse, but you can’t divorce the debts incurred during your marriage.

When either party contemplates bankruptcy, one consideration is the timing of the filing and whether the parties should file a joint bankruptcy before or during the divorce, or an individual bankruptcy before, during, or after the divorce. Your creditors are not part of the divorce, and the family court cannot alter, modify or revise the contract between debtors and their creditors.  Any joint debt discharged by one party will leave the other party solely liable, exposed to collection efforts and law suits, and will often force the other spouse to repay or file bankruptcy.

Both spouses are responsible for the debts incurred during the time of the marriage. Your divorce settlement will divide up the debts, assigning responsibility for some to one spouse and some to the other. But that divorce settlement is between you and your ex-spouse. It doesn’t bind the creditor, who can collect the debt from either one of you. This means if your ex-spouse doesn’t pay his or her share of the debts, the creditor can come after you for payment.

HOW CAN I GET STARTED?

Call our office today and set up your free consultation with our Attorney’s. Here you will discuss which chapter of bankruptcy is best for you.

Bankruptcy can mean different things to different debtors. There are several types of bankruptcy chapters provided under the U.S. Bankruptcy Code, each with its own rules and procedures.

The most common filings for bankruptcy are chapter 7 and chapter 13. Chapter 7 will wipe out all your unsecured debt (credit cards, medical fees, utilities, etc.). You can also keep your house and vehicle in chapter 7, as long as your current on payments. Chapter 7 is a straight bankruptcy, referred to as a liquidation bankruptcy. This will stop all collection proceedings including phone calls, mailings, garnishments and court proceedings. As many as 65% of consumer bankruptcy filings in the U.S. are chapter 7. Under a Chapter 7, any debt incurred to a spouse or former spouse that is incurred during a divorce by agreement, decree or court order is not dischargable.  If any assets are recovered, these debts are paid before most of the other debts.

Chapter 13 is a repayment plan. It is referred to as a wage earner. You must have a reliable source of income so that you can repay all or a portion of your debt. Chapter 13 will stop a foreclosure or repossession as well. It is designed to help you retain your home or vehicle if your behind. You will repay 1% to 100% of your unsecured debt, depending on the individuals situation. This will last a minimum of three years and maximum of five years. During this time it will be up to the creditors to file claim in order to be paid during the case.  Under a Chapter 13, the debtor may receive a discharge from obligations incurred as part of the divorce if certain conditions are met.

HOW CAN I GET BACK ON TRACK?

Once you have fully discharged, rebuilding can sometimes seem like an overwhelming task. But it’s important to realize that there is life after bankruptcy. Repaying your existing bills as agreed will be one of the single, most powerful things you can do to restore your finances and your credit.

FREE CONSULTATION

Contact our office at 513-752-3900 to schedule your free consultation to see if bankruptcy will give you the finanical relief you are looking for.

BANKRUPTCY IS YOUR RIGHT AND PROTECTED BY THE CONSITUTION

The office of Keegan & Company Attorneys has been in practice for nearly 30 years.

Bankruptcy is specifically mentioned in the United States Constitution.  The United States Constitution states “The Congress shall have Power to establish….uniform laws on the subject of bankruptcies through out the United States.”  This means bankruptcy is constitutional.

The founders wanted to ensure that there would be a uniform system of bankruptcy so that one state would not put someone in debtor’s prison for a debt that was discharged in another state.  James Madison, in Federalist Paper No. 42, wrote about how important uniform bankruptcy laws would be for the regulation of commerce in the United States.  In this article the power to pass and regulate bankruptcy was mentioned in the same paragraph as the power to issue currency and regulate the use of foreign currency.

The United States Congress passed the first bankruptcy law in 1800.  However, that law only lasted until 1803.  The next bankruptcy law was not passed until 1841, which also had a short life, lasting only until 1843.  After the civil war, Congress passed a bankruptcy act with a little more longevity, lasting from 1867 to 1878.  Congress finally passed a permanent bankruptcy law in 1898, which remained in place for eighty years.  The current structure of bankruptcy laws was enacted in 1978. In 1984, 1986, 1994 and 2005, the bankruptcy act was revised, but the basic structure remained in effect.  The 2005 act added the means test, limits on restructuring vehicle loans and the credit counseling requirement.

Bankruptcy can help you get a fresh financial start.  It is designed to discharge all of your unsecured debts.

At our office we offer a free consultation where you can sit down with one of our attorneys and discuss your individual situation.

Call us at 513-752-3900 to schedule your free consultation. We offer 2 convienent locations: Eastgate & Middletown. Easy Parking. Fair Fees. Caring and Knowledgeable Attorneys.

Bankruptcy Chapter 7 v. Chapter 13

 

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.  Many prefer to qualify for Chapter 7 but may not qualify.

BANKRUPTCY TIMELINE

In Ohio a typical Chapter 7 bankruptcy lasts about six months from the day you file until you receive your discharge.  Your actual court date which is called a “341 Meeting of the Creditors” will be four to six weeks out from your filing date.  Once you file for 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.

PAY BACK OF DEBTS

In bankruptcy different debts are classified in basically two groups.  Your unsecured debts (credit cards, medical debts, loans) and your 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.  If you file for Chapter 7 you will be able to discharge all of your unsecured debts and not have to pay anything back.  Most unsecured debts can be discharged, student loans and most taxes will likely survive the case.  As to secure 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 payment the trustee may make your regular house payment.  If you have any back payments on your home they would also make this payment for you.  If there is a vehicle payment involved this will also be made by 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 and your utilities to pay during the duration of the case.

ASSETS

One big benefit of Chapter 13 is you will not have to worry about losing any of your assets in the case.  You keep all of your assets that you wish to keep.  In a Chapter 7 which is also referred to as a liquidation bankruptcy as the trustee may take some of your assets and liquidate them to gain funds to pay your creditors.  Most people do not have to worry about this though because in Ohio the exemptions are very high and most assets can be protected.

As to your home if you want to qualify for a Chapter 7 you must be current on your mortgage payment to keep your home.  If you file Chapter 7 and 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 they can begin the process of foreclosure.  However, if you are current on your home Chapter 7 is no problem, just continue to make your payments and you may reaffirm the debt in the case is you wish.

Chapter 13 is designed to help you save your home if you are behind on your payments.  Under Chapter 13 you will have the three to five year period to make up your missed payments through the case.  The trustee will also make your regular house payment and at the end of the case the trustee will certify that all payments are current.

MORE INFORMATION

Call today to set up your free consultation to find out which bankruptcy chapter is best for you.