We are a debt relief agency– we help people file for bankruptcy relief under the bankruptcy code.
If you have lost your job, are overwhelmed by bills, are going through a divorce, or are worried about losing your home, our firm is here to help you in the following areas:
What is bankruptcy?
Bankruptcy is a legal procedure to relieve individuals and businesses from debts.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy filing. Chapter 7 provides debtors, who have limited financial means, with a fresh start by eliminating many of a debtor’s financial obligations through the bankruptcy discharge. Chapter 7 eligibility is based, in part, on income; generally, individual debtors earning approximately $42,000 per year are eligible to file Chapter 7 bankruptcy.
However, the income restrictions increase with the size of the debtor’s household. If a debtor’s income is too high, the debtor may be eligible to file Chapter 13 bankruptcy. It is imperative for a debtor to meet with an attorney to determine whether or not s/he is eligible to file Chapter 7 bankruptcy because the income restrictions are modified annually.
In return for the discharge, the debtor must submit certain nonexempt assets. However, most debtors do not have to submit any assets because their assets are exempt, or, in other words, protected; such cases are referred to as “No Distribution” cases. On the rare occasion that the debtor does have nonexempt assets (referred to as an “Asset” case), the nonexempt assets are sold where the proceeds are distributed to creditors according to the priorities are set forth in the Bankruptcy Code.
In general, all property owned by the debtor, whether individually or as a co-owner with any other person, becomes part of the Bankruptcy Estate. The Estate– including property the debtor acquires by gift, devise, inheritance, divorce settlement, and life insurance– proceeds the right to which arises within 180 days after the filing of the case, and also includes property recovered by the Chapter 7 Trustee under certain Bankruptcy Code provisions. The Estate, however, is reduced by exempt assets. If the Trustee determines that all of the assets within the Estate are exempt, then the Trustee abandons the assets and the Debtor does not need to turn over any assets.
Advantages of Chapter 7 bankruptcy
- Chapter 7 stops almost all legal actions against and communications with the debtor.
- Most unsecured debts (such as liabilities relating to credit card debts, judgments, medical bills, and utilities) are discharged
- A debtor may be able to keep all of his or her assets.
- A debtor can generally choose to retain his or her home and/or vehicles even if his or her home and/or vehicle(s) are collateral for a secured creditor.
Disadvantages of Chapter 7 bankruptcy
- Debts relating to certain debts (such as taxes, governmental fines, forfeitures, restitution, criminal conduct, child support, spousal support, and student loans) may not be dischargeable.
- Secured creditors may be able to repossess their collateral.
- Chapter 7 filings are matters of public record and are generally noted on a debtor’s credit history for 10 years, making it more difficult to obtain credit in the future.
Chapter 13 bankruptcy
If the debtor is not eligible to file Chapter 7 because of the debtor’s income level, Chapter 13 may be an option. In Chapter 13 bankruptcy, the debtor proposes a Repayment Plan to his or her creditors and the court enables the debtor to repay as much debt as is feasible given the debtor’s financial circumstances.
To be confirmed by the court, the plan must provide that the debtor’s future income be subject to court administration. After determining a reasonable budget, the debtor’s remaining income is paid (generally monthly) by the debtor’s employer to the Chapter 13 Trustee who, after taking a commission, pays the creditors according to the plan provisions.
A plan generally lasts three years, but may last up to five years if the court approves the longer period, or if a debtor is required to propose a five-year plan due to their income level. At the end of the plan, the debtor is entitled to receive a discharge of any remaining debt.
Advantages of Chapter 13 bankruptcy
- Chapter 13 stops almost all legal actions against and communications with the debtor.
- The debtor retains all desired property, provided creditors obtain at least as much under the plan as they would under Chapter 7.
- The debtor may have the ability to “write-down” secured debts to the value of the collateral.
- The debtor may be able to modify interest rates on some loans and extend the payment term on non-homestead debts to make them more affordable.
- The debtor may cure loan defaults by making installment payments, and reinstate accelerated mortgage and other notes.
- The discharge is broader than in Chapter 7 so that more types of debts are dischargeable.
Disadvantages of Chapter 13 bankruptcy
- The debtor’s future income is subject to administration by the Trustee for the duration of the plan.
- The Trustee is entitled to a commission on payments paid to creditors.
- Chapter 13 filings are matters of public record and are generally noted on a debtor’s credit history for 10 years, making it more difficult to obtain credit in the future.
Should I consult with an attorney if want to file for bankruptcy?
Bankruptcy laws are complicated and you should consult with a bankruptcy attorney if you have questions about bankruptcy. Consulting an attorney if you are considering filing bankruptcy will alleviate your questions and concerns in advance of filing bankruptcy.
This information is intended to be viewed as general information. Your individual situation or needs require consultation with the advice of an attorney. We are here to help you today.