Virtually no one wants to file bankruptcy, but for many people it can be the best or even the only option. There are two types of consumer bankruptcy: a Chapter 13 and a Chapter 7. If you are considering bankruptcy, having a qualified and experienced attorney can give you an advantage. Once you file bankruptcy, all of your creditors are ordered by the court to cease collection activity including harassing calls or suing you.
If you are considering bankruptcy, contact Advantage Legal Center and we will make the process as easy as possible for you. In addition to full service bankruptcy representation, we also offer a discounted bankruptcy petition document service which does not offer a an attorney to represent you, but can make the process smoother by preparing all of your bankruptcy documents and coaching you through the process.
Prior to filing bankruptcy or shortly after, you will be required to attend an individual or group counseling session from a nonprofit agency approved by a United States trustee or bankruptcy administrator. Your attorney will provide you with a list of approved agencies.
A chapter 7 bankruptcy is a process of liquidation of all of your non-exempt property. Assets that are not exempt will have to be forfeited and applied to your debt. Exempt assets vary state by state and your attorney will discuss this with you prior to filing. Typically if you owe money on your home or car, you will keep those in the bankruptcy as long as you make on time payments. Most unsecured debts are dischargeable although some debts that are not dischargeable typically include income tax, property tax and student loans. During the course of a chapter 7, you will have to complete a Statement of Current Monthly Income and Means Test Calculation which will determine if you have the ability to pay back all or a portion of your debt. If you do, your only option may be to file a chapter 13. The bankruptcy reform passed in 2005 added additional requirements to discharge debt in a chapter 7.
Unlike a chapter 7, in a chapter 13 you will pay back all or a portion of your unsecured debt over 3-5 years. Your attorney will analyze your financial situation and determine what you can afford to pay. Once the court approves the plan you will pay the trustee which is usually drafted from your paycheck and the trustee will distribute funds to your creditors. The advantage of a chapter 13 is you are allowed to keep assets that you otherwise may not in a chapter 7. Creditors cannot add interest and fees during your repayment plan. A chapter 13 can also be used to prevent home foreclosure or repossession of a vehicle as long as the amount owed in the arrears are paid back according to the bankruptcy plan, in addition to making the regular payments on time.