If you are drowning in debt, collections, or garnishments, filing bankruptcy can provide you with a fresh start. We can assist you in understanding your options, including Chapter 7 or Chapter 13 bankruptcy. An experienced bankruptcy attorney can also help you develop a comprehensive debt relief strategy.
What Is Bankruptcy?
Bankruptcy is a legal proceeding overseen by the federal court that eliminates most types of debt. Filing bankruptcy can be a scary prospect, and people often delay the process because of the stigma attached to it.
Don’t be swayed by myths and misconceptions. Thousands of hardworking Americans file for bankruptcy relief each year. Due to unforeseen circumstances — such as employment changes, divorce, or medical situations — people become unable to pay meet their financial obligations. Bankruptcy can be the answer to rebuilding your finances.
Consumer bankruptcy takes two forms:
Chapter 7 is sometimes called a “fresh start bankruptcy.” You will be able to keep certain exempt property. Any nonexempt property will then be sold to pay your creditors. In many cases, people who file for Chapter 7 get to keep all their property, including both their houses and cars. A typical case lasts 3-6 months. At the end of your case, you will receive a legal discharge.
Under Chapter 13, you enter a repayment plan that lasts 3-5 years. The repayment plan requires court approval and keeps you under the protection of the bankruptcy court. There are some debts that must be repaid in full (e.g., child support) and others that will only partially be repaid. At the end of the plan, you receive a legal discharge.
Both Chapter 7 and Chapter 13 have pros and cons associated with them. An experienced bankruptcy attorney can help you determine which bankruptcy chapter is best suited to your situation.
Is Bankruptcy the Best Option for Me?
Bankruptcy can be a viable option to handle debt, but it’s not the best option for all debt matters. Certain debts cannot be discharged, such as:
- unpaid child support,
- unpaid alimony,
- student loans, and
- certain types of taxes.
It’s important to educate yourself regarding your options before filing bankruptcy. For example, you may benefit from such things as debt settlement, counseling, or restructuring.
However, if you have significant unsecured debt (for example, credit card debt, medical debt or personal loans), bankruptcy can provide significant advantages. These debts are typically discharged in bankruptcy.
A bankruptcy attorney can help you navigate this process and end creditor harassment. Once you have a clean slate, you can rebuild your credit and financial profile.
How Do I Qualify for Bankruptcy?
In order to qualify bankruptcy, you must meet some strict eligibility requirements.
- Chapter 7 means test: Chapter 7 requires you to pass the “means test.” Your household income must fall below the median average for your state and household size.
- Chapter 13 eligibility: Chapter 13 requires your debts to be below a predetermined amount. Moreover, you must have at least some disposable income to repay at least a percentage of what you owe.
Bankruptcy eligibility is complex. If you need assistance determining your eligibility, an experienced bankruptcy attorney can assess your situation and then develop a debt relief strategy that addresses your needs.
Understanding the Bankruptcy Process
A bankruptcy filing requires you to file multiple documents (called a petition) with the United States Bankruptcy Court. The petition includes the following:
- Whether you seek Chapter 7 or Chapter 13 relief,
- Creditor lists and debt information,
- Personal and financial information, and
- Proposed repayment plan (for Chapter 13).
Petitions require precision and accuracy. If you make mistakes, the bankruptcy court can dismiss your petition. The court only grants a discharge of debts if a petition makes its way through the bankruptcy court process.
What Does the Trustee Do?
Once you file the petition and related documents, the court will appoint a trustee. The case trustee oversees your bankruptcy, liquidates assets if required, and/or reviews your repayment plan.
How Long Does the Process Take?
The overall duration and process for Chapter 7 and Chapter 13 are different. Your bankruptcy attorney will assist you in navigating the process, including trustee negotiation and court hearing attendance. If you do not hire an attorney, you’ll have to face all of these tasks alone. The bankruptcy court holds individuals to the same standards and rules whether they have attorney representation or not.
Contact a Bankruptcy Attorney Today
A bankruptcy attorney can be critical in crafting an effective debt plan. Because the bankruptcy system is so complex, handling a bankruptcy filing on your own can be quite daunting. At Farmer & Wright, we focus on our clients’ future and rebuilding their futures. Contact us for a free consultation today.