When creditors find you legally insolvent and you can no longer afford daily necessities because of lay-offs, foreclosure, repossessions, credit card and medical bills, and deficiencies, you are not out of options. We are dedicated to help you gain your financial freedom the easiest possible way.
While there are several types of bankruptcy, most consumers will file for Chapter 7 or Chapter 13 bankruptcy. Both options help our clients gain financial stability, but each pertain to different financial situations.
Chapter 7 bankruptcy grants people with exhausted consumer debt and not enough income with which to pay it to receive legal forgiveness. Not all debts can be included in a federal bankruptcy case and there are specific guidelines that must be kept in order to file for a Chapter 7 bankruptcy. If you are a Chapter 7 filer, you are expected to pass a federal means test. You may be required to repay a portion of your debt under Chapter 13 bankruptcy if your income should be too high for Chapter 7 bankruptcy. Chapter 7 bankruptcy is listed on a consumer’s credit file for ten years, but the included debts will show a balance of zero on the reports thereby improving many consumers credit scores. In a Chapter 7 case, most personal property can be kept, including retirement accounts.
**Important Notes: In a Chapter 7 case, taxes less than three years old will not be included in proceedings.
What debts will you be expecting to pay?
Unlike Chapter 7 bankruptcy, Chapter 13 allows the debtor to keep property and to continue to pay debts over a period of time if they are still receiving an income. The time frame for this period of time normally ranges from three to five years. In the period of three to five years, the debtor has proposed to make installment plans to creditors. If the debtor’s income is less than the state median, the plan will be for three years. If the debtor’s income is greater than the state median, the plan will typically be for five years. Plans over a period of five years are not applicable in any case. During this time, creditors will be restricted from continuing or starting collection efforts.
Chapter 13 protects third parties and co-signers who are liable with the debtor on consumer debts.
While filing for Chapter 13 bankruptcy may be seem simple, bankruptcy attorneys are required due to the complexity of bankruptcy law. The debtor makes payments to a Chapter 13 trustee who then administers payments to creditors. Chapter 13 bankruptcy offers protection the debtors who do not want direct contact with creditors.
To find out if you qualify for Chapter 7 or Chapter 13 bankruptcy, give us a call today to set up an appointment for a free consultation.