Bankruptcy is easily misunderstood and bears many negative connotations, from destroyed credit to personal failure and from loss of all one's valued possessions to an instant cleanse of all past debt. However, in today's society and economy, you may find that the benefits of personal bankruptcy outweigh the negatives and disadvantages. The first concept to grasp is that bankruptcy is not punishment nor proof of your failure as a productive member of society. So what is bankruptcy and what does it offer? Under Federal law, bankruptcy provides a means to get out from under overbearing debt, stop the often offensive and debilitating collection activities of your creditors (especially for repossession or foreclosure), and provide you with a new beginning, unencumbered by overwhelming debt.
You may have heard that there are two main types of personal bankruptcy, Chapter 7 and Chapter 13. What's the difference, and which, if either, is better for you? Each type of bankruptcy has its own benefits and process. Federal law governs bankruptcy in every state, making the process largely uniform, although there are differences from state to state in some regards. The two main forms of bankruptcy for individuals are Chapter 7, also known as straight bankruptcy or liquidation, and Chapter 13. They differ in key ways. Chapter 7 allows the discharge of your debts when your assests are liquidated by the trustee to pay your creditors at least a portion of what you owe them. In contrast, Chapter 13 requires that the debtor to file a repayment plan with the bankruptcy court, which may repay all or a portion of your debts, depending upon such variables as your earnings, the property you own, and the type of your debts you carry. No property is lost, and repayment is funded through your disposable income over time.
Chapter 7 bankruptcy applies when you cannot pay off your debt and you either have only a small amount of money remaining after paying your basic monthly expenses, or you cannot even meet these basic expenses. In contrast, Chapter 13 applies when you don't want to lose significant assets or real property, and/or, although you have steady income that adequately meets your monthly expenses, your obligations are too great and you have fallen way behind in meeting them.
With Chapter 7, you can discharge all or most of your unsecured debts, prevent creditors from contacting you regarding your debts, and potentially complete the process, complex as it may be, in just a few months. However, the process is complex, especially given the 2005 amendments to the Federal law. An experienced bankruptcy attorney can navigate these waters, facilitating your desire to discharge your debt.
Chapter 13 filing is difficult and complicated, but it can allow you to keep most or all of your property, set a creditor payment schedule to finally catch up on the accounts on which you've fallen behind, and make a single monthly payment towards all of your debts in aggregate, rather than separately with diverse interest rates.
So how do you determine if bankruptcy is right for you? How do you choose between the various forms (Chapter 7 and Chapter 13)? How do you move forward? If you are considering bankruptcy, call our bankruptcy hotline at 508-626-0998 for a free initial consultation. We can discuss what options are appropriate for you, guide you through the complexities of the bankruptcy process, and end your debt problems.
We are a debt relief agency helping people to file for bankruptcy protection under the United States Bankruptcy Code. Nothing herein should be considered legal advice. The data on this website is for informational purposes only. No attorney / client relationship can be formed until an in person meeting is conducted and certain documents are signed. If you have any questions, please contact the attorney directly. Copyright 2008-2022 The Law Offices of Barry R. Lewis All rights reserved.