Chapter 7 Bankruptcy
Chapter 7 bankruptcy is commonly know as the liquidation chapter or personal bankruptcy. After the 2005 bankruptcy overhaul, a Debtor’s eligibility for Chapter 7 is partly determined by a Means Test. If your annual income exceeds the median income for your geographic area as determined by IRS guidelines, you may or may not be eligible to file.
Under any Chapter, you are required to list all of your debts on your petition.
An Asset is anything you own or may have a right to own at some future date. For example, if you are a beneficiary of someone’s will. Some (and in many cases, all) of your assets will be exempt. Generally, an exempt asset is yours to keep and does not become part of the Bankruptcy Estate. A detailed analysis available exemptions is not possible here. Basically, you can exempt any items normally used for your support and maintenance, such as clothing, furniture, household goods, and so forth. After you file your case, a Trustee is appointed who will liquidate all of your non-exempt assets and pay your creditors according to the priority afforded them under the Bankruptcy Code.
You may voluntarily repay any debt upon agreement with the creditor. Whether this is ever advisable is questionable and is an issue that I can discuss with you.
You can also reaffirm a secured debt, such as a car loan or mortgage. If you reaffirm a debt you become contractually bound to pay the debt in full. This is not often an easy decision. Each case is different, and several factors come into play. This is an example of where a Chapter 7 Debtor benefits by coming to a small firm such as mine. As I have already said, we are not the largest firm doing bankruptcy nor do we want to be. Since I will personally handle your case from beginning to end, I will be in an excellent position to advise you in a manner which will maximize the results you want.
Chapter 13 Bankruptcy
This Chapter helps individuals or small business owners to repay all or some of their debts to creditors. Generally, whatever is not paid back will be discharged. Chapter 13 offers a great opportunity to pay off past-due mortgage or car payments over a 36 to 60 month period, thus giving you time to catch up while still keeping your property. Chapter 13 is sometimes referred to as a “mini-Chapter 11" because you make payments under a Plan of reorganization that, when approved by the Court, allows for a monthly repayment amount you can afford, and the ability to retain your property.
To be clear: Chapter 13 bankruptcy is a debt repayment plan for individuals, but the repayment can be anywhere from 0% to 100% of your unsecured debt. Even a 100% repayment plan in a Chapter 13 case can often work better than trying to repay your creditors outside of bankruptcy. This is because you pay 0% interest to your unsecured creditors.
There are some Court and Trustee fees, but I can evaluate your budget and see what you can accomplish in a Chapter 13 as compared to other options.
(This information does not constitute legal advice. No attorney-client relationship exists until you come to our office, we accept your case, and a written attorney-client agreement is signed. You should always seek legal advice from a bankruptcy attorney in your jurisdiction before relying on information from any website. You are welcome to contact us, but please DO NOT send or e-mail unsolicited, confidential information since attorney-client privilege may not protect the information.)