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Is Bankruptcy Right For You?
Bankruptcy Law is a Federal Law and provides relief from certain debts to individuals or businesses. If your situation is such that your monthly financial obligations outweigh your monthly income, bankruptcy may be right for you.
If your home is threatened by foreclosure, filing a bankruptcy petition will place an automatic stay on the foreclosure action.
Chapter 7. Under a chapter 7, most of your consumer debts may be discharged. However, a Trustee is appointed to your case and if you own any property of value , the Trustee will take control of such property and sell it, using the money to pay your creditors. You may be able to retain your home and/or automobile by reaffirming on the original debt regarding that asset depending on your equitable position in the home or asset.
Chapter 13. Under a chapter 13, a repayment plan is proposed to the Court for approval. Since this plan provides for partial or full repayment to creditors, depending on your disposable income, you must have some source of regular income that allows for necessary housing and living expenses plus a certain amount of disposable income to provide the Court to be used towards repayment of your creditors. A repayment plan usually runs three years and based on court approved circumstances, can run up to five years. Basically, you personally continue payments on your home, utilities and normal day-to-day expenses and the Court prorates payments to your creditors.
Chapter 11. This chapter is usually utilized for businesses and allows the business to continue to operate under a court approved repayment plan. The Judge will decide if a Trustee will be appointed to control the business and property.
It should be noted that while most of your consumer debts owed at the time of filing may be discharged, certain debts cannot be discharged. Some non-dischargeable debts include child support and maintenance, taxes, certain education loans, and court imposed fines or restitution. Additionally, certain consumer purchases within 6 months of filing may by reviewed by creditors for further action.
The above information provides a very brief synopsis of the provisions of bankruptcy and will undoubtedly leave many questions unanswered. This information is not meant to be a substitute for receiving advice from an attorney. As with any legal matter, an attorney should be consulted.
Our office offers a free 1/2 hour consultation where you can meet with an attorney to thoroughly discuss your personal situation to see if bankruptcy is right for you.
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