Chapter 7 is a liquidation bankruptcy that is filed to cancel unsecured debt and obtain a fresh start. The filing of the case stops all collection activity, including phone calls, letters, and legal action. Debts associated with credit cards, unsecured loans, and garnishments can be cancelled. Certain debts however, can not be cancelled. This will be reviewed in detail at your initial consultation.
Advantages oF FILING A CHAPTER 7 BANKRUPTCY
- Once a Chapter 7 bankruptcy is filed, an “automatic stay” goes into effect, preventing creditors from contacting the debtor, garnishing wages, or otherwise trying to collect what they are owed.
- Chapter 7 bankruptcies are completed relatively quickly, in four to six months.
- Most debts are completely erased. Some exceptions are: certain tax debt, alimony, child support, and student loans.
- While the trustee has the right to liquidate a debtor’s non-exempt assets in a Chapter 7 case, the reality is that exemptions often protect all of a debtor’s assets.
- Your income after you file a Chapter 7 bankruptcy is not part of the bankruptcy case, with few exceptions, such as inheritances received within six months after filing.
- Legal fees for a Chapter 7 bankruptcy are lower than those for a Chapter 13.
- There are no monthly payments to make or ongoing paperwork in Chapter 7 bankruptcies, in contrast to Chapter 13.
Chapter 13 is a reorganization bankruptcy. We are able to set up payment plans through the United States Bankruptcy Court to help you:
- Stop home foreclosure and enable the mortgage arrearage to be caught up slowly over time.
- Eliminate a second mortgage. This is possible if the value of your home is less that what is currently owed on your first mortgage.
- Reclaim a repossessed vehicle and enable the vehicle to be paid at a reduced amount and reduced interest rate.
- Pay child support, income taxes, or student loans at a reduced monthly rate.
Advantages of FILING A CHAPTER 13 BANKRUPTCY
- Filing Chapter 13 bankruptcy can halt a foreclosure and protect a home with equity that would be nonexempt under a Chapter 7.
- Chapter 13 can protect co-signers who are jointly liable with the debtor on consumer debts.
- Chapter 13 essentially consolidates debts; the debtor makes monthly payments to the trustee, who then makes payments to creditors.
- Chapter 13 can lower payments on some secured debt (mortgages are excluded) by extending the payments over the life of the plan.