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Bankruptcy Law

Chapter 7

The most preferable type of bankruptcy is a Chapter 7. With a Chapter 7, the debts of the borrower are completely liquidated, which is why it is often referred to as a "clean-slate" or "fresh-start”.



Removing Debt: In a Chapter 7 Bankruptcy almost all unsecured debts can be wiped out including Credit Cards, Pay Day Loans, Medical Bills, balances owed on repossession or foreclosure, Personal Loans, etc. There are some exceptions of types of debt that cannot be wiped out, such as student loans, alimony and child support.


Retention of Property: Although the purpose of the liquidation is to sell the assets of the party declaring bankruptcy and to distribute those assets to the creditors, there are protections and exceptions for property that cannot be liquidated. In most cases you can keep your home and vehicles depending on the amount of equity in those assets.


Qualifying For Chapter 7

An individual seeking to file a Chapter 7 Bankruptcy must now pass what is called the "means test" in order to qualify. Should an individual not qualify for a Chapter 7 Bankruptcy then they often file a Chapter 13 Bankruptcy establishing a repayment plan over 3 to 5 years.

Chapter 13

Chapter 13 Bankruptcy is a debt consolidation option that reorganizes an individual's or family's debt. A chapter 13 Bankruptcy creates a manageable payment plan for the debtor rather than eliminating the debt upon completion of the petition.



Consolidation of Debt and Repayment Plan: A Chapter 13 Bankruptcy will allow the petitioner to create a debt repayment plan in coordination with the bankruptcy trustee that will allow the petitioner to meet the financial requirements of the debt. This plan will allow the petitioner 3-5 years to make payments on delinquent accounts by making a monthly payment to the Bankruptcy Trustee who will then distribute the funds to debtors. The Creditors will not have direct contact with the Petitioner.


Retention of Property and Stopping Foreclosure: When a Chapter 13 petition is submitted, the Bankruptcy Court will halt the foreclosure process during the bankruptcy proceedings. This can provide the Petitioner relief and time to stay in their home to catch up on past due mortgage payments.


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