Chapter 7 Bankruptcy
Chapter 7 bankruptcy is one of the common chapters to file and is also known as the liquidation bankruptcy because you are liquidating all your debts and potentially assets. In a Chapter 7 bankruptcy, the trustee looks for assets that you may have that can be sold at auction in order to pay your debts. If the only assets you have are protected from repossession, then you have a No-Asset Case. With No-Asset Cases, you lose no property and your case will be moved directly to the discharge phase of the proceeding.
A Chapter 7 may be best for you if:
You have an excessive amount of unsecured debt
It is difficult to keep up with the minimum payments
Most or all of your debt is Unsecured debt – (definition)
With a Chapter 7 Bankruptcy, we can stop foreclosure and repossession. We can even get a repossessed vehicle back if you act quickly. We can stop garnishments as soon as we file your case.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is also a common chapter to file bankruptcy under but not as common as Chapter 7. Chapter 13 Bankruptcy if:
You have consistent income
Even with the consistent income, you are struggling to pay your bills
You are nervous that a single unexpected expense like medical bills could be or already is enough to put you in an extreme financial bind.
In a Chapter 13 bankruptcy, you will set up a 3-5 year budget with the court-appointed trustee that is reasonable and is likely to succeed. Throughout the 3-5 years, you will pay back only a percentage of the total debt that the court determines is reasonable, pro-rata to your creditors. Once your payment plan is completed, you will no longer have the obligations to your creditors. You are done. A Chapter 13 bankruptcy is similar to a consolidation loan, but generally gives you better rates, lower principles with a better outcome. The big reason to file a Chapter 13 over a Chapter 7 is that with a Chapter 13, you don’t risk losing any of your property because you are repaying the debt.
With a Chapter 13 Bankruptcy, we can set it up so there is no money down, you can stop foreclosure and repossession. You can even get a repossessed vehicle back if you act quickly. You can stop garnishments as soon as we file your case.
Chapter 7 compared to a Chapter 13
Disadvantages of Chapter 7 compared to Chapter 13
An option for families facing foreclosure or whose incomes are higher, Chapter 13 bankruptcy permits you to pay off debts under a court-ordered installment plan extending three to five years. This option provides numerous advantages, including the possibility of keeping your home.
For individuals and their spouses who own fewer assets and earn smaller incomes, Chapter 7 bankruptcy grants you relief from debts through liquidation of your assets.
For corporations, partnerships and sole proprietorships, Chapter 11 bankruptcy permits your business to continue operating while you pay creditors under a reorganization plan.
Important Terms and Definitions for Bankrtupcty
Reprieve through automatic stayFiling a bankruptcy petition automatically triggers an automatic stay, meaning creditors must immediately stop collections letters and phone calls. I correspond with your creditors from the moment you file for bankruptcy and act entirely on your behalf.
One big misconception with a Chapter 7 Bankruptcy is people sometimes believe that you will lose everything your own. Fortunately this is not the case. You are protected to keep certain assets like your home, car, household goods, tools for trade, etc (link).
Definition and Examples of Unsecured Debt
Definition and Examples of Secured Debt
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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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Cope Law Group, PLLC