What should I know about filing for consumer bankruptcy?
Deciding to file bankruptcy is a serious decision, most people never plan to file bankruptcy, they work hard and pay their bills, but an unexpected loss of employment, medical emergency or divorce can cause a financial disaster. Often many small things over time will lead to a situation where the debt is simply too large to handle. The stress of financial problems can lead to serious health and relationship problems, and bankruptcy can help.
We specialize in consumer bankruptcies, chapter 7 and chapter 13. Consumer bankruptcy will allow a majority of individuals to discharge all or most of their debts and stop foreclosures, garnishments of wages and bank accounts, vehicle repossessions, and harassing phone calls from debt collectors. In some cases bankruptcy can even eliminate back taxes.
What Should I Know About Chapter 7 Bankruptcy?
Filing for chapter 7 bankruptcy will, in essence, allow you to wipe out your debts and provide you with a fresh start. Chapter 7 bankruptcy serves as a liquidation process where a trustee will collect all of your assets that are not listed as an exempt asset. The trustee will then sell these assets and use the proceeds to pay your creditors, with a small commission taken by the trustee that oversees the distribution.
The vast majority of Chapter 7 Bankruptcies are no-asset bankruptcies. A no-asset bankruptcy is where there are no non-exempt assets at stake and the only cost to you to get immediate debt relief will be attorney fees and a filing fee. It's important to remember that there are certain debts that cannot be discharged through chapter 7 bankruptcy, such as alimony and child support payments, student loans, and fraudulent debts. In most cases, the process of filing for chapter 7 bankruptcy will eliminate all other debts, providing the debtor with a clean financial slate.
What should I know about chapter 13 bankruptcy?
When filing for chapter 13 bankruptcy, a debtor will propose a three to five year repayment plan to all creditors offering to pay off all or part of the debts from the debtor's future income. Typically individuals will choose chapter 13 to prevent a house foreclosure, payback missed car or mortgage payments, or to prevent other valuable non-exempt property from being seized. If you can follow the terms of your repayment agreement, all of your remaining dischargeable debt will be released at the end of the plan. There are other stipulations that must be met in order to file chapter 13 bankruptcy, but among them is the requirement of a regular source of income and some amount of disposable income that can be applied to your repayment plan.