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When To File For Chapter 13 Consumer Bankruptcy

March 24th, 2010 Admin No comments

One particular question that a majority of clients thinking of filing for bankruptcy a  bankruptcy attorney is: “So what’s the distinction between Chapter Thirteen and Chapter Seven?” Whereas Chapter 7 bankruptcy is basically “liquidation” — the use of your present possessions to pay back your creditors, Chapter Thirteen was established to offer you a chance to reorganize your fiscal position in a process which will allow you to pay some or all of your financial obligations while using the money you earn in the future. Though quite a few assets remain safeguarded from being sold to pay back creditors in Chapter 7 bankruptcy, if ever the value of your interest in any property exceeds the federal or state exemption amount, that property can be liquidated with the profits applied towards your financial obligations.

Assets are not liquidated in Chapter 13 . Instead, you can retain and continue to use all of your possessions irrespective of whether it is protected with an exemption. Your financial obligations are paid for through a bankruptcy plan that has been approved by the bankruptcy court. If you complete the plan, you receive a discharge similar to the discharge in a Chapter 7.

There can be exceptions to your Chapter 13 discharge. By way of example, long term debts with final installments owing subsequently after the plan is concluded which are “cured” in the plan aren’t discharged. Specified tax debts aren’t discharged. Neither are debts incurred by means of fraud, ones not listed in the bankruptcy, most student education loans, or drunk driving debts and other criminal penalties or civil penalties.

Whether or not a discharge can not always be granted in your specific circumstance, there are occasions when it could be in your best interest regardless. Even though a discharge is unavailable under Chapter Thirteen, if you are behind on your mortgage loan and at risk of losing the house to the lender, Chapter 13 Bankruptcy can allow you to prevent a foreclosure and get caught up with your mortgage payments through the plan.

A large number of people today are convinced that in the event that they have to file for bankruptcy that they will lose anything and everything they’ve got. This, though, is not so. While both Chapter 7 and Chapter 13 have their particular distinct strengths,Chapter 13 bankruptcy is most often the favored chapter for those wishing to save their homes from foreclosure.

Chicago bankruptcy lawyer, and publisher of Chicagoland Bankruptcy Help, John Kunes works hard to be the bankruptcy lawyer Chicago can depend on.

Categories: Chapter 13, Chapter 7 Tags: , , , , ,

Chapter 7 Bankruptcy Information

December 13th, 2009 Admin No comments

One of the main purposes of Bankruptcy Law is to give a person who is hopelessly burdened with debt a fresh start by wiping out his or her debts. Under Chapter 7 Bankruptcy the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt that are discharged under Chapter 7 Bankruptcy.

Chapter 7 bankruptcy, which is sometimes call a straight bankruptcy, is a liquidation proceeding. A trustee is appointed. The debtor turns over all non-exempt property to the bankruptcy trustee who then sells it for cash which is then given to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose, so Chapter 7 will give that person a relatively quick “fresh start”. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.

An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor is allowed to keep certain property by continuing to pay for a car loan or a mortgage on their home. This agreement is possible because under the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.

Even though in some cases a Chapter 7 bankruptcy would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.

Under the federal bankruptcy statute, a discharge is a release of the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay any debts that are discharged. The discharge operates as a permanent order directed to the creditors of the debtor that they refrain from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Although a debtor is relieved of personal liability for all debts that are discharged, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover (repossess) the property secured by the lien.

If you file under Chapter 7 you must undergo a “means test” to qualify for Chapter 7 bankruptcy. This is how the IRS determines who can or can’t file. Your income and expenses are examined to see how they compare to the standard for your area as set by the IRS.

For example, if you earn less than the median income for a family of your size in your state, you can file for Chapter 7 bankruptcy. However, if your income from the last six months is greater than the median income, and you can pay at least $6,000 over five years or $100 a month, toward your debt you can’t file for Chapter 7.

As soon as you file for bankruptcy, creditors are prevented from trying to collect on your debts through an “automatic stay.” The stay preserves your property and gives you a break from being sued. It’s very important to note that Chapter 7 will not stop repossession or a foreclosure. Automatic stays don’t cover failure of making back payments. Only by filing Chapter 13 can you delay a foreclosure.

Categories: Chapter 7 Tags: , , , ,