Is Filing for Bankruptcy the Right Move?
That’s a big question, a lot to think about.
- What does “discharge” mean?
- Will I lose my house?
- Are all my debts forgiven?
- What happens to my credit cards?
- Will I ever be able to buy a home?
These are just some of the considerations we will discuss.
I will counsel you on the debt forgiveness you're entitled to receive and the obligations that will be expected of you.
My goal is to help you obtain the maximum available debt relief. By taking timely advantage of the U.S. Bankruptcy Laws, you can take control of your finances.
We'll discuss all of your options so that you can make the best decision for your situation.
What is a Chapter 7 Bankruptcy?
A Chapter 7 Bankruptcy is a complete “discharge” of all or most unsecured debts. This includes medical bills, credit card bills and signature loans. Your secured loans, like car payments and home mortgages, must be paid and kept current if you want to keep that property.
What is a “discharge”?
A discharge is a court order releasing you from all dischargeable debts and ordering your creditors not to attempt to collect them from you. A debt that is discharged in your bankruptcy is completely wiped out and you do not have to pay it. You will see below that there are some debts that are not released by a Chapter 7 discharge.
Which debts are not released by a Chapter 7 discharge?
The debts listed below are exceptions to a Chapter 7 discharge.
- Student loans
- Most taxes
- Domestic support obligations
- Traffic tickets
Can I go ahead and use my credit cards?
No. Do not incur any more debt, that would be fraud. Also, it is a good idea not to dispose of, sell, trade in or give anything away without checking with your attorney first.
Do I have to attend Credit Counseling before I file?
Yes. The Bankruptcy Code requires that all individual debtors who file for bankruptcy relief receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis.
What is a Chapter 13 Bankruptcy?
Also known as a debt consolidation plan Chapter 13 differs from Chapter 7 in that it does not immediately discharge all of your debts. However, it does have many advantages over a Chapter 7 plan. A Chapter 13 bankruptcy can do several important things:
- Allow you to catch up on mortgage arrears
- Strip an unsecured second mortgage
- Allow you to pay tickets and get your license back if your license is suspended
- Decrease interest rates on vehicles to 5%
How does a Chapter 13 Bankruptcy differ from a Chapter 7 Bankruptcy?
In a Chapter 7 Bankruptcy, there is a discharge of most debts. In general, the unsecured debt is discharged and secured debt is either paid or the property is surrendered.
In a Chapter 13 Bankruptcy, a financial plan is created in which you reorganize your debts and pay either all or a portion of this debt. Your income is evaluated and what is determined as your excess disposable income is used to create a payment plan. The plan duration is between three and five years.
The primary advantage of this form of bankruptcy is that you may be able to keep all or most of your secured assets (house, car, etc.) and discharge some or all of your unsecured debt.
To clarify, the plan payment amount is based on your disposable income and your ability to pay. If you maintain your regularly scheduled payment, at the end of the plan your remaining debts are discharged, and you maintain your secured assets.
A Chapter 13 Bankruptcy is different and more complex than a Chapter 7 Bankruptcy and seen as non ideal for some clients seeking bankruptcy protection, since there is a continuing payment on your debts rather than a total dissolution, as in a Chapter 7 Bankruptcy. An experienced attorney can help you decide which is the best decision for you.
Shuffield Bankruptcy Law has the expertise to guide you through the Chapter 13 process. I offer free consultations and work with you through every step of the process — from the preparation of a financial plan to the closure of your case. Trust that you will be in good hands.