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Bankruptcy

Get the right advice on bankruptcy.

Bankruptcy

Should I file for bankruptcy?

Who should file for bankruptcy protection?

If your debt is unbearable and you are considering bankruptcy, contact our office to speak to a bankruptcy attorney. Bankruptcy law is designed to help you dig yourself out from a tough financial situation, whether the source of your debt is illness, a lost job, divorce, death or other tragedies that life can give us. We can help you decide whether bankruptcy is the best option for you, and if so, determine which type of bankruptcy you qualify for and guide you through the process. Although your credit score will suffer heavily from a bankruptcy, the relief offered by bankruptcy can give you the breathing room to get you back on track. Bankruptcy automatically freezes all lawsuits in state courts, and stops creditors from attempting to collect their debts directly from you. Instead, all debt related issues will be resolved in the bankruptcy court. This freeze will also temporarily halt all foreclosure lawsuits so that you have time to restructure your debt and attempt to save your home.

There are several requirements that you must complete to be eligible for bankruptcy, including undergoing credit counseling within a six-month period prior to filing for bankruptcy and completing a financial management instructional course once you have filed bankruptcy to prepare you for the future. You are also subject to the bankruptcy “means test”, where your income and expenses are analyzed to determine which chapter of bankruptcy you can file to pursue debt relief.

Alternatives to Bankruptcy

If you would like to discuss alternatives to bankruptcy, we can determine an appropriate course of action for you. First, we would analyze your debt, including the amount of debt you owe, the age of your debt, whether you can still be sued on the debt, whether the lender typically sues on its debt, and whether you have any defenses that may result in not having to repay the debt. Alternatively, we can help you settle all or some of your debts with your creditors, or help you consolidate your debt if you have the credit or means to qualify for a loan to restructure your debt without having to resort to bankruptcy.

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Which type of bankruptcy?

There are two main types of bankruptcy that individuals can file for: Chapter 7 and Chapter 13. There are also two types of debts that are affected by bankruptcy; secured debt and unsecured debt. A debt is secured when the debt is tied to collateral, like a mortgage is tied to the house (where they will foreclose on the house if you default) or a car loan (where they will repossess your car if you default). A debt is unsecured when the is no collateral tied to the debt, like a credit card or store account. However, there are certain debts that are not affected by bankruptcy and cannot be wiped clean such as certain tax debts, child and spousal support and most student loan debt.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is the standard bankruptcy that comes to mind where you wipe away your unsecured debts. This bankruptcy is generally reserved for when you have no real assets so that you can resolve your debts. If you do have some assets, the bankruptcy trustee may liquidate the asset but you are allowed to keep certain “exempt” property. Depending on your situation, these “exemptions” might protect most or even all of your property. However, during this time your assets are essentially the property of the bankruptcy court, meaning that you cannot sell or give away your property, or even pay off your debts, until the bankruptcy trustee decides how it wants to handle the asset (i.e. liquidate the asset to repay your debt to a lender of its choice or agree that the asset is exempt). The best way to learn whether you qualify for a Chapter 7 Bankruptcy and how much of your property would be protected is to consult a bankruptcy attorney at the Law Office of Joseph Harrison. After your Chapter 7 Bankruptcy discharge, your unsecured debts are wiped clean.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a different type of bankruptcy which typically reorganizes your debt. If you have enough financial resources where you can afford to pay your debts over time (typically if you have a decent job but just have too much debt), this may be the only bankruptcy option available to you. In a Chapter 13 bankruptcy you pay your creditors over a three to five-year period with a priority on debt that is not dischargeable in bankruptcy and secured debt. This option may be preferred as you are able to keep some property that would otherwise be liquidated in a Chapter 7 bankruptcy. After calculating the amount needed to pay the priority debt, as well as your required household expenses, the remaining amount will be allocated to the unsecured debt, although it is usually for a fraction of the amount owed. This repayment plan must be calculated before being put into use, and the plan must provide unsecured creditors with at least as much payment as they would receive in a Chapter 7 liquidation. It must also either be agreed to by the creditors, result in a full repayment of the creditors, or commit all of your disposable income for a period of time determined by your income. The credit consequences of one of these bankruptcies are still severe, but they are not as severe as the consequences of a Chapter 7 proceeding.

Law Offices of Joseph I Harrison

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