How do I know which chapter bankruptcy I need to file?

There are many factors that go into determining which chapter of bankruptcy is best including what kind of debts you have, what assets you have, whether you are behind on secured debts, and your current disposable income. In addition, there is also a set of caluclations known as the means test which may require some consumers to file Chapter 13 because their income exceeds the median income for a household of their size in their state.

Give us a call and we can speak with you about which chapter best suits your needs.

How does filing for bankruptcy help?

Bankruptcy may make it possible for you to:

•Eliminate the legal obligation to pay some or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.

•Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)

•Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.

•Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

What does it cost to start a bankruptcy?

The upfront cost and total cost varies by chapter and complexity.  Most chapter 13 petitions can be started with $0 down on the attorney fees and court costs.  These fees and costs are paid as part of your chapter 13 plan.

For chapter 7 petitions, we are able to set up payment arrangements for the attorneys fees.  Contact us for a free quote and details.

What is Bankruptcy?

Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

What is Chapter 13 Bankruptcy?

Chapter 13 is the reorganization provision of the bankruptcy code and is sometimes referred to as the “wage earner” provision. Chapter 13 allows debtors with a steady source of income to create a repayment plan by which creditors will be paid over an extended period of time. Generally, the plan will be such that creditors will be paid out over a three to five year period. In the plan, creditors do not necessarily have to be paid in full but they must receive as much as they would have received had the debtor filed under chapter 7 of the bankruptcy code. The plan is structured based on the income of the debtor net living expenses. The benefit of the chapter 13 bankruptcy is that the debtor is allowed to keep all of his or her property. Once the debtor has fulfilled the obligations under the plan, the debtor will be discharged from the debts that were not paid under the plan.

What is Chapter 7 Bankruptcy?

Chapter 7 is the liquidation provision of the bankruptcy code and is sometimes referred to as “straight bankruptcy.” Under chapter 7, the assets of the debtor are collected and sold and the proceeds are distributed to the creditors. The debtor is allowed to keep some property which is exempt under the Bankruptcy Code or the laws in the state in which the debtor resides. However, anything that is not exempt will be used to satisfy the claims of creditors. With this said, the substantial majority of cases are cases in which the debtor is able to exempt all of his or her assets under the code leaving creditors nothing. This is known as a “no asset” case. Once the debtor gives up all non-exempt property, the debtor is granted a discharge from most of the debts that are remaining.

Will bankruptcy stop wage garnishments, repossessions and/or foreclosures?

Yes. In most cases, a court order known as the “automatic stay” will stop garnishments, repossessions and/or foreclosures.

Will I lose all of my assets or property in a Chapter 7 Bankruptcy?

No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a “fresh start” by exempting property from the bankruptcy estate.

The vast majority of bankruptcy cases are “no asset” cases, in which the debtors have claimed an exemption in everything they own and there are no assets from which to pay creditors.

Will I lose my house if I file for Chapter 7 Bankruptcy?

Not necessarily.

If there is no equity in the house, the trustee in a Chapter 7 will abandon the house to you meaning that you will be able to keep it, as long as you pay the mortgages. A bankruptcy does not relieve the property of the liability for voluntary liens, like mortgages or deeds of trust, nor for tax liens. So, the lender retains the right to foreclose if you don’t pay.

If there is equity in the house, it must be determined whether the equity is exempt. If the equity is exempt, you will be able to keep it, as long as you pay the mortgages. If the equity exceeds the exemptions allowed by the state, you should consider a chapter 13.

Will I lose my retirement accounts if I file for bankruptcy?

No, most forms of retirement savings are unaffected by a bankruptcy filing, either because they are not property of the estate or because they may be claimed exempt from the claims of creditors.