Bankruptcy
Bankruptcy:
Always the option of last resort, there are two types of Personal Bankruptcy.
This Information is for Informational purposes only and not intended to be legal advise.
After counseling with us, If you believe that a Bankruptcy is your last resort, please consult a bankruptcy attorney.
Chapter 7:
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Chapter 13 (Reorganization)
In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over a 60 month period (5 years). The most important thing about a chapter 13 case is that it will allow you to keep valuable property-especially your home and car-which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases these payments will be at least as much as your regular monthly on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a Chapter 13 plan if you:
(1) own your home and are in danger of losing it because of money problems or foreclosure;
(2) are behind on credit card payments, but can catch up if given some time;
(3) have valuable property which you would lose in a Chapter 7 (because it is not exempt), but you can afford to pay creditors from your income over time.
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