Are you considering filing a bankruptcy? First, answer a few questions:
Are you facing a foreclosure? Have a large credit card debt? Are you being harassed by creditors? Are your wages being garnished or bank accounts being levied? Has your car been repossessed, or is the IRS or FTB breathing down your neck?
If you answered yes to any of these questions, then filing bankruptcy may be right for you.
The two most commonly used forms of bankruptcy are Chapter 7 bankruptcy and Chapter 13 bankruptcy. Whether a consumer should file a Chapter 7 bankruptcy or Chapter 13 bankruptcy depends on a number of factors, such as:
- Whether they pass the Means Test;
- Whether their property can be adequately protected under the applicable statutes; and
- Whether they are attempting to save a home or automobile.
BANKRUPTCY – CHAPTER 7
Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy. A Chapter 7 bankruptcy discharges most types of debts; however, a bankruptcy trustee can liquidate, or sell, nonexempt property to pay a debtor’s creditors.
Filing Chapter 7 bankruptcy is a great option for the right candidate to quickly get rid of credit card debt, medical debt and potentially some (if not all) tax debt.
However, in determining whether to file a Chapter 7 bankruptcy, it is important to consider what assets can be protected under the available statutes. Another way of putting this is looking at what value in assets or property can be exempted under the law. This is where consulting with an attorney can make a huge difference in protecting assets from sale by a bankruptcy trustee in a Chapter 7 bankruptcy. Call my office at (916) 538-0115 for a free consultation on whether filing a Chapter 7 bankruptcy is right for you.
BANKRUPTCY – CHAPTER 13
Chapter 13 bankruptcy is often referred to as reorganization bankruptcy. A Chapter 13 bankruptcy is called this because it allows consumers to reorganize their debts and repay some or all of their debt over 3 to 5 years. Chapter 13 bankruptcy is usually ideal for consumers who: (1) do not pass the means test, (2) have a home that they want to catch up on the mortgage, and/or (3) have significant equity in assets that cannot be protected.
In a Chapter 13 bankruptcy, a debtor makes payments to a Chapter 13 bankruptcy trustee who then takes a fee and pays the debtor’s debts. Common debts that are paid during a Chapter 13 bankruptcy are:
- Mortgage payments
- Mortgage arrears
- Past due HOA dues
- Car payments, and
- Tax debt.
General unsecured debt, such as credit card debt and hospital bills, may or may not need to be paid through the Chapter 13 bankruptcy plan depending on the debtor’s financial circumstances.
Filing and successfully completing a Chapter 13 petition and plan is complicated. This is why it is especially important for you to contact an attorney if you are considering filing a Chapter 13 bankruptcy. Call my office at (916) 538-0115 for a free consultation to begin guiding you through this complicated process.