Bankruptcy

Chapter 7

In Chapter 7 bankruptcy, the bankruptcy trustee cancels many (or all) of your debts. This is the most common type of bankruptcy for an individual. Chapter 7 bankruptcy, also called "straight" or "liquidation" bankruptcy, is so named because the law is contained in Chapter 7 of the federal Bankruptcy Code. There is no repayment plan made with Chapter 7 and you usually get your discharge in 3 months. we guide you through the entire process until you receive your discharge paperwork. Our goal is to help make you debt free! We include counseling classes and credit reports in all of our bankruptcy packages. 


 

Who can file


You won't be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan.


 Filing for Chapter 7 bankruptcy puts into effect something called the "automatic stay." The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab ("garnish") your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service.


The Creditor's Meeting


 A week or two after you file, you (and all the creditors you list in your bankruptcy papers) will receive a notice that a creditor's meeting has been scheduled. The bankruptcy trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and the papers you filed. In the vast majority of Chapter 7 bankruptcies, this is the debtor's only visit to the courthouse. 


 

At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except:

  • debts that automatically survive bankruptcy, such as child support, most tax debts, and student loans, unless the court rules otherwise, and
  • debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by your fraud or malicious acts.

Let us help you through this difficult financial time. Call us today. 

Chapter 13

Eligibility


 

Chapter 13 bankruptcy isn't for everyone. Here are a few requirements you should know upfront.

  • Debt limits. Secured debts cannot exceed $1,184,200, and unsecured debts cannot be more than $394,725 (these figures will adjust for inflation on April 1, 2019). A "secured debt" gives a creditor the right to take property (such as your house or car) if you don't pay the debt. An "unsecured debt" (such as a credit card or medical bill) doesn't give the creditor this right. If your total debt burden is too high, you’ll be ineligible, but you can file an individual , instead.
  • Steady income. When you file a Chapter 13 case, you’ll have to prove to the court that you can afford to meet both your monthly household obligations and pay into a repayment plan. 
  • Not a business. This chapter isn’t available to companies, meaning that only an individual can file for Chapter 13 bankruptcy. However, business-related debts that you’re personally responsible for will be part of your plan, and therefore, from a practical standpoint, a sole proprietorship might be able to benefit from this chapter. 

 Filing and completing a Chapter 13 bankruptcy case is far more complicated than Chapter 7 bankruptcy. Here’s a snapshot of the process:


Mandatory Courses and Filing fees, the repayment plan typically covers these debts.  

he central part of your Chapter 13 case is the repayment plan that you’ll propose to your creditors and the court. Amongst other things, the plan must take into account each of your debts. You’ll use either the official plan form or your court’s local form, depending on where you file.

Your creditors and the bankruptcy trustee will have an opportunity to object to your plan. If you’re able to make changes to everyone’s satisfaction, the court will likely approve (confirm) your plan at the confirmation hearing. You won’t wait until plan confirmation to start paying your monthly payment, however. Your payments will begin the month after you file.


  • Priority debt. Your Chapter 13 plan must pay certain debts—called priority claims—in full. Priority claims include child support and alimony arrearages, and most tax obligations.
  • Secured debt. If you want to keep a car or house, you’ll have to continue to pay your regular payment on the car loan or mortgage. Whether you’ll have to pay these amounts as part of your plan will depend on your local court. If you’re behind on payments, you’ll have to repay the arrearages in your plan.
  • Unsecured debt. The plan must apply your disposable income (the amount remaining after paying secured and priority debt, as well as allowed living expenses) toward unsecured debts, such as credit card balances and medical bills. You don't have to fully repay these debts, or even pay them at all, in some cases. You just must show that you are putting any remaining income towards their repayment.
  • Value of nonexempt property. You’re allowed to keep all of your property in a Chapter 13 bankruptcy if you can afford to do so. You’ll have to pay the value of any property that you can’t protect with an exemption through your plan.

Call us today so we can guide you through this complex matter. A small mistake can be detrimental in bankruptcy.