Bankruptcy Lawyers

Bankruptcy Lawyers Can Help

Financial dilemmas often follow other already overwhelming circumstances. From divorce to business problems to medical bills — the majority of crises we face carry financial burdens that often result in even bigger issues. Bankruptcy Chapter 7 Chapter 13

Bankruptcy offers options for easing the stress of excessive debt by stopping collections and foreclosures — while allowing you to manage your debt through property liquidation, loan restructuring and payment plans.

The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13 bankruptcy, and choosing the right one for you depends on several variables unique to your situation.

Chapter 7 or Chapter 13?

The primary difference between Chapter 7 and Chapter 13 bankruptcy involves financial eligibility. In broad strokes, Chapter 7 works best for those with less disposable income, and Chapter 13 works best for those with a little extra money.

While both forms of bankruptcy offer viable options for different financial challenges, they also come with their own limitations and advantages that you should be aware of before deciding which form of bankruptcy, if any, is right for you.

Chapter 7 Bankruptcy

Chapter 7 works best for those without surplus money, and those with mostly unsecured debts (meaning that you didn’t offer anything up front in exchange for the loan).

Those eligible for Chapter 7 must make less than their state’s median income, or pass an official financial inquiry known as a means test.

Will I lose my property if I declare bankruptcy?

Chapter 7 bankruptcy involves paying creditors through property liquidation, so you will forfeit some of your possessions to compensate for the debt.

However, state laws have exemption lists dictating which possessions are subject to liquidation, and these protect you from losing items that you need to survive or maintain a job — including your home, car, work-related items and many household possessions.

How long is the process?

Chapter 7 bankruptcy usually takes a few months from start to finish.

Will all my debts be released after I file for bankruptcy?

With Chapter 7 bankruptcy, after the liquidation of all non-exempt property in your estate, most of your unsecured debts (personal loans, hospital bills, etc) will be forgiven.

For secured debts, you have the option to return the property or pay off the debt under a contract you devise with the creditor. Otherwise, you are still responsible for these debts.

Some debts — known as non-dischargeable debts — cannot be forgiven through bankruptcy. Things like income tax debt, child support or student loans will stay with you. As you decide which form of bankruptcy suits you, make sure to account for your non-dischargeable debt.

How difficult is the process?

Some simpler Chapter 7 cases can be completed without the help of a lawyer, though you must still navigate some complex legal documents and informal court proceedings.

Chapter 13 bankruptcy

For those with money to spare each month, Chapter 13 is the more common option. That extra money is factored into a long-term repayment plan that allows you to easily manage your debts.

As of April 2016, Chapter 13 eligibility requires the sum of unsecured debts to be below $394,725, while all secured debt must be below $1,184,200.

Will I lose my property if I declare bankruptcy?

With Chapter 13 bankruptcy, you don’t need to give up any property because all outstanding debts will be factored into your repayment plan. If you follow the plan, you keep everything, but otherwise your property is subject to repossession.

Chapter 13 bankruptcy takes a bit longer because of the structured repayment plan. You can expect to be paying on your restructured debt for 3 to 5 years.

Will all my debts be released after I file for bankruptcy?

If you successfully complete your repayment plan, the remaining balance of unsecured debts will be forgiven.

You may factor secured debts into your repayment plan to make sure you don’t lose any property associated with those loans that bankruptcy doesn’t forgive outright.

Similar to Chapter 7 bankruptcy, Chapter 13 does not account for non-dischargeable debt. Tax-related payments, child support and student loans will not be released even after successful completion of your repayment plan.

The monthly plan depends on your disposable income after factoring in essential payments. The bankruptcy court must approve of your plan beforehand, and it will be designed to compromise with your budget for ease of repayment.

How difficult is the process?

Chapter 13 bankruptcy almost always calls for legal counsel due to the nuance of negotiating the repayment plan with the bankruptcy court.

If you wish to learn more about bankruptcy or begin the filing process, contact Legal Direct here to be connected with the right attorney for your situation.

Your time to file a claim may be limited, so don't delay! Contact us now.
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