How Bankruptcy Can Help
Bankruptcy Helps Because it:
Stops Lawsuits
Stops Repossessions
Stops Garnishments
Stops Harassing Creditor Calls
Permits You To Keep Your Home
Permits You To Keep Your Car
Permits You To Protect Your Wages
- May Lower Your Car Payments
Chapter 7
Debts are classified into three different categories. Secured Debt, which is debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Priority Debt, which is a type of debt that is paid first if there are distributions made from the bankruptcy estate in a Chapter 7 bankruptcy, and must be paid in full in a Chapter 13 bankruptcy. Priority Debts are non dischargeable (meaning you will remain responsible for them), and include certain tax debt, student loans, and domestic support obligations. Finally, Unsecured Debts are debts or general obligations that are not collateralized by a lien on specific assets. Examples are credit cards; medical bills, most personal loans; judgments resulting from car accidents; and deficiencies on repossessed vehicles.
In a Chapter 7, unsecured debt is eliminated. Secured debt will be eliminated if you choose not to keep that property. Typically you are allowed to keep your property in a Chapter 7 so long as your payments are current on your mortgage, car, or any other asset you wish to keep. In addition there must not be significant equity in your property, and you must be able to continue to pay for the property you intend to keep. A reaffirmation agreement must be signed by you in order to keep any property of your choosing. This reaffirmation agreement permits the debt to survive the bankruptcy and allows you to keep that property typically under the same conditions as prior to your bankruptcy.
Some people do not qualify for a Chapter 7; however most people who make less than the average income of the same size family in their state will qualify. We will run an analysis based on your last six months of income to determine if Chapter 7 is an option.
Chapter 7 is a good choice for people who cannot make any payments to their secured creditors. It usually last anywhere from 4 to 6 months from the date you file to the date of your discharge. Once you get the discharge the case will be closed and you will have a fresh start.
Typically in a Chapter 7, you will have only one court appearance. This is a 341 meeting of creditors; it is an informal hearing lasting 5 to 10 minutes. The hearing will be conducted by a Trustee that will ask questions about your petition.
Chapter 13
In a Chapter 13, your debts are classified in the same manner as in a Chapter 7. The key difference is that in a Chapter 13 you are required to submit a monthly payment to a Trustee who will disburse the proceeds to different creditors who have different priorities in when and how much they get paid on a monthly basis. Chapter 13 last longer than Chapter 7. The advantages of the Chapter 13 is that it stops foreclosures and repossession attempts by your creditors or it is an alternative for people with too much equity on their assets or do not qualify for a Chapter 7.
Chapter 13 can be viewed as a debt consolidation were you pay your debt over a 3 to 5 year period. Creditors cannot collect from you, and are required by a Federal Court order to adhere to the terms of the repayment plan approved by the court.
In order to qualify for a Chapter 13 you must be working or have a consistent source of income to make payments according to your repayment plan approved by the court. In addition to having the ability to make your trustee payments, you must also have sufficient income to pay for your monthly living expenses. Debts that are generally consolidated in a Chapter 13 include mortgage arrears, balances on vehicles, student loans (depending on amount owed) and back taxes. Depending on several factors Unsecured Debt may be paid back anywhere from 0 to 100 cents on the dollar. Most however will be able to eliminate all or pay little on their Unsecured Debt.
Which Is the Best Option For You
Speaking with an attorney will permit you to make an informed decision as to what action will serve your best interest. At the very minimum you will get peace of mind as to what you can do to protect you and your family from creditor actions.
Get peace of mind, get a fresh start, and improve your financial future. Call today 770-864-2197with no obligation. If a bankruptcy is not the best course of action for you to take, or you decide not to go through with a bankruptcy, no worries, there is no charge for your appointment.
Peace of Mind is only a phone call away.
Call us today for a FREE initial consultation!
Johnson Law Office is a debt relief agency that helps people file for bankruptcy
