If you are struggling with debt issues, a member of our firm can discuss your legal options. One option may be to file a bankruptcy petition. Individuals or consumers may be eligible to file for relief under the U.S. Bankruptcy Code, either Chapter 7 or Chapter 13, and in some cases, Chapter 11. Not all individuals are eligible to file.
Upon the filing of a bankruptcy petition, the law imposes the benefit of the automatic stay in most cases. The automatic stay stops most collection efforts against you, including foreclosure proceedings/sheriff's sale, garnishments, and attachments.
If you qualify to file a Chapter 7 bankruptcy, or "liquidation," you will likely be able to discharge most (if not all) unsecured credit card balances and medical bills. To qualify for Chapter 7 bankruptcy protection, you must pass an income threshold and meet other criteria. In addition, if you have previously received a discharge under Chapter 7, you cannot file another Chapter 7 bankruptcy petition for eight years although you may eligible to file a Chapter 13 petition. You may lose ownership of certain "non-exempt" assets.
In a Chapter 13 bankruptcy, consumers enter into a debt repayment plan with creditors. Debt is repaid over a three to five year timeframe, and any remaining unsecured debt is discharged after completion of the repayment plan. In a Chapter 13, the Bankruptcy Court must approve any payback plan.
The decision of whether to file any bankruptcy petition should be made after consultation with legal counsel.
Frequently Asked Questions
Can I keep my house in a bankruptcy? In a Chapter 7, if you are current on your mortgage and can afford to continue the monthly payments, you may be able to reaffirm the debt and keep your house. If you are behind on your house payments or mortgage, a Chapter 13 will allow you the opportunity to "catch up" on the arrearage and stay in your home.
Can I keep my car? In a Chapter 7, if you are current on your car payments, you may be able to reaffirm, redeem, or surrender the debt on your vehicle. You can always continue making your car payments in a Chapter 13 and, in certain circumstances, "cram down" the payback amount to the fair market value of the vehicle.
Are all debts dischargeable in bankruptcy? Some debts cannot be discharged, including domestic support/child support obligations, most taxes, and student or education loans.
Will I lose my furnishing and other personal property? Each individual is entitled to certain property exemptions. If a married couple files a joint bankruptcy petition, each spouse may claim a full exemption.
Our firm would welcome the opportunity to discuss your debt relief options and further discuss the bankruptcy process.