WHY FILE FOR BANKRUPTCY?
Bankruptcies have many uses to help bring relief to everyday people. Bankruptcies may help to achieve the following:
- Eliminate unwanted credit card, medical, repossession and other miscellaneous debt
- Stop wage garnishments
- Stop foreclosures
- Eliminate a second mortgage
- Lower the interest rate on an auto loan
- Remove judgment liens from real estate
- Help manage tax liability
WHICH OPTION IS RIGHT FOR ME?
CHAPTER 7 BANKRUPTCY
Chapter 7 is a process where a Debtor identifies all debts and all assets. Most of your basic necessities like clothes and furniture are protected by law. To be eligible for Chapter 7, you must meet certain income thresholds based on your household size. A Trustee is appointed by the court to ensure accuracy of the documents filed and make a determination as to whether or not there are assets in a case. Chapter 7 is considered a liquidation bankruptcy as any property not protected by law is sold to pay creditors in exchange for full forgiveness of certain debts for a fresh start. However, some debts do not go away with bankruptcy. Common examples include taxes, student loans, court fines or fees and child support or alimony.
CHAPTER 13 BANKRUPTCY
Chapter 13 is a payment plan that runs 36-60 months. However, it does not mean that you pay all of your debts in full but the payments must be completed for your debts to be forgiven. Chapter 13 has many uses but is most often utilized when someone makes too much money for Chapter 7, has assets they do not want to lose in Chapter 7 or need to catch up payments on a car or house.