Bankruptcy Overview


The Federal Bankruptcy Code is designed to help people who are overwhelmed by debt get relief and make a fresh start. There are two types of bankruptcy petitions for individuals and families: Chapter 7 and Chapter 13. Depending on your situation, either Chapter 7 or 13 can help you eliminate your debt while keeping your property and actually improve your credit rating.

Chapter 7:

Otherwise known as a "Fresh Start Bankruptcy," if you qualify for a Chapter 7 based on your income, you can receive a discharge of your debts within only a few months of filing. Most people who qualify are also able to keep all of their assets by exempting them, including household goods and cash in the bank. In a Chapter 7, you can also reaffirm the loan on your car if you wish to keep it.

Upon the filing of your Chapter 7 petition, collectors must immediately stop all calls, bank levies and wage garnishment, and you may be able to recover monies taken from you in the last 90 days. Once you receive your discharge, collectors must remove the debt from your Credit Report. Chapter 7 is truly a fresh start.

Chapter 13:

If you make too much money for Chapter 7 relief, or are trying to save your home from foreclosure, you can file a Chapter 13, or "Debt Adjustment Bankruptcy." Under Chapter 13 you can still eliminate thousands of dollars of debt while preserving all of your assets.

Filing a 13 immediately stops all collection actions against you, including foreclosure proceedings. Your attorney works with you and the court to determine a monthly payment you can afford to bring and keep you current in your home and car payments. You may even end up owing significantly less on these assets, because Chapter 13 allows you to completely eliminate your second mortgage if your home is "underwater," and reduce your car loan to its current value if it is more than 2 years old.

Once you have completed your bankruptcy plan (usually in 3 or 5 years) you will receive a discharge of most remaining unsecured debts, like credit cards and medical bills, even if those creditors received as little as 0-10% from you under your plan.

There are benefits to both types of bankruptcies, but to determine which is best for you, you must consult an attorney experienced in this field. Filing the wrong kind of bankruptcy may result in the loss of assets or an incomplete discharge of your debts. For more information about Chapter 7 and 13 visit my blog.

Home   ::   About James Michel   ::   Blog   ::   Testimonials   ::   Contact Us