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Chapter 7 bankruptcy is what people usually think of when they think of bankruptcy. Chapter 7 bankruptcy is a liquidation. When you file a Chapter 7 bankruptcy a trustee is assigned to administer your case. The trustee will evaluate your property to determine if anything can be liquidated to pay creditors. Bankruptcy laws allow you to keep certain property from being taken and used by the trustee. We can let you know which items are protected from being taken.
Approximately 2 to 3 months after filing Chapter 7, you will receive a discharge. A discharge eliminates unsecured debt (credit cards, medical bills, etc.), and any deficiency balance owing on property you decide to surrender to your secured creditors (mortgages, auto loans, etc.).
It is possible to retain property that secures debt (homes, cars, furniture, etc.), depending on your payment history with the individual creditors. If you decide to keep certain items, we will arrange for you to continue making payments on the loans secured by those items.
Please keep in mind, some types of debt are not discharged by a Chapter 7 bankruptcy, such as student loans, recent taxes, and alimony or child support.
Chapter 13
A Chapter 13 bankruptcy is also known as a reorganization. People filing Chapter 13 are allowed to keep all of their assets. When you file a Chapter 13 you propose a Plan to re-pay all or a portion of the debt you owe. Plans are required to last from 3 to 5 years. Similar to a Chapter 7, a Trustee is assigned to administer your case in a Chapter 13. The Chapter 13 Trustee is in charge of receiving your monthly Plan payments and distributing funds to your creditors. The amount of your Plan payment will depend upon what you owe, what property you choose to keep, and your net income after paying your living expenses.
Virtually any debt can be included in a Chapter 13, including past back mortgage payments, tax debt, secured debt, student loans and past due alimony or child support payments. A Chapter 13 can prevent your house from being foreclosed on, or your car from being repossessed.
Please schedule an appointment to meet with one of our attorneys if you would like to discuss your options in detail. We can let you know which Chapter would work best for your situation, and we can let you know what to expect once you file.
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