What is a Chapter 7 Bankruptcy?
Chapter 7 is a liquidation of the debtor’s assets by which the creditor’s debts are eliminated. Chapter 7 can only be filed when the debtor has no excess income to pay off his or her creditors. The bankruptcy laws impose a threshold income based on the median income of the area in which the debtor resides. If the debtor’s income exceeds the threshold, the debtor will be required to file a Chapter 13 bankruptcy.
What types of debts are wiped out in a Chapter 7?
Most individuals use a chapter 7 bankruptcy to eliminate unsecured credit card debt. Under certain circumstances, attachments on your real estate as a result of credit card debt can also be discharged of. However, certain debts cannot be discharged or eliminated, such as child support, alimony, student loans and any debts incurred by fraud.
Can I eliminate my tax debt in a bankruptcy?
Under certain circumstances, an individual can discharge their income tax debt in a bankruptcy. The answer to this question largely depends upon the type of taxes owed and the dates of their assessment an filing.
Will I lose all of my real and personal property when I file bankruptcy?
A common misconception is that when you file bankruptcy, you will lose all of your real property and personal belongings. THIS IS NOT THE CASE. There are exemptions available that protect certain types of assets such as your house, cars, money in your bank account, qualified retirement plans, household goods and clothing. Many people file bankruptcy in order to protect their home, car and other assets from their creditors.
If I file for bankruptcy, does my spouse have to file for bankruptcy also?
No. If you are married, you can either file as an individual or as a married couple. The advantages of filing as a married couple include saving money on legal fees, court filing fees, and you can eliminate all the debt for your entire household rather than just one spouse. The main advantage of filing as an individual is that the non-filing spouse’s credit should not be negatively impacted.
Can bankruptcy protect me from wage garnishment or attachment?
Yes. If your wages have been garnished or attached by one of your creditors, fling bankruptcy will stop the garnishment as soon as the case is filed.
What is a Chapter 13 bankruptcy?
Chapter 13 is a debt repayment plan. A Chapter 13 can occur if the debtor’s income exceeds the threshold in a Chapter 7 or if the debtor has excess income. It is extremely useful where a debtor is in arrears on their mortgage and wants to avoid foreclosure. In a Chapter 13, the debtor is required to file a plan by which the debtor will repay his creditors. However, repayment does not have to be made in full. As long as the creditors under the plan receive more that they would have in a Chapter 7 discharge (which is 0% of what is owed), then the plan can be confirmed. The laws impose a threshold based on the median income for the area where the debtor resides (The rules are complex and require explanation at our first meeting). If the debtor’s income is below the threshold, the plan may be up to three years or five years. If the debtor’s income is above the threshold, the plan may be to five years. This means that if a debtor is below the threshold and can pay more than 1% of the amounts owed to the creditors within three years, then the plan can be limited to three years. If the debtor’s income is above the threshold, unless complete payment of debts owed to the creditor’s can be accomplished in less than five years, the plan must last five years.
Can I discharge my second mortgage?
Under certain circumstances, depending upon the value of your home and the balance owed on your first mortgage, we may be able to discharge your high interest second mortgage in a carefully crafted Chapter 13 bankruptcy.
If I file bankruptcy, will I be able to obtain credit in the future?
Believe it or not, you will likely receive credit card offers not long after filing bankruptcy. However, the offers will be from lenders charging very high interest rates and you don’t want to fall into the same debt trap so soon after receiving your bankruptcy discharge. But, for example, if you need to get an automobile, you will likely be able to get credit. Also keep in mind that if you have a credit card with a zero balance on the day you file for bankruptcy, you don’t have to list it as a creditor since you don’t owe any money on it. That means you might be able to keep that card even after the bankruptcy. For more information pertaining to this issue, please visit the section in our website entitled “Rebuilding Credit.”
Who will know I have filed bankruptcy?
The only people who will know about a filing are your creditors. While it’s true that bankruptcy is a public legal proceeding, there are so many people who file, newspapers do not have the space, or inclination to publish all of them.
What will filing bankruptcy cost?
Since everybody has unique and different circumstances, it can be very difficult to provide a quote for the cost of filing bankruptcy without fully knowing your story. However, we are both sensitive to your situation and flexible with payment arrangements. Please visit the section in our website pertaining to fee agreements.