Bankruptcy

Definition Of Bankruptcy
Bankruptcy is a procedure established under Federal law, which allows individuals to eliminate some or all of their debts. Generally, people who file bankruptcy:

• Can keep their homes or automobiles as long as they keep paying on their mortgage or car loans.
• Can keep their ordinary possessions, i.e., usual furnishings.
• People without extraordinary assets, such as large amounts of cash or an expensive home with no mortgage on it, will be able to keep all of their assets.

Types of Bankruptcy

• Chapter 7 Bankruptcy: A Liquidation Plan
  Most individuals who need bankruptcy protection file a Chapter 7. It is the quickest, easiest, cheapest and most common way to deal with consumer debts. Chapter 7 is called a "liquidation" due to state and federal exemptions, which allow filers to keep certain assets. Most Chapter 7 filers do not lose any property, and end up keeping their house, car and personal possessions.

• Chapter 13 Bankruptcy: A Repayment Plan
  Chapter 13 is a repayment plan which requires the bankruptcy filer to pay all of his disposable income (that is, income minus ordinary living expenses) to a Chapter 13 Trustee, so that creditors are getting some payback of their debts.

  • Advantages Of A Chapter 13
    Chapter 13 is good for individuals who do not qualify for a Chapter 7 because they earn too much money, have filed a Chapter 7 in the previous eight years and, therefore, are ineligible for another Chapter 7, or have assets that would be lost in a Chapter 7 that they want to protect. A Chapter 13 is particularly useful for individuals who are significantly behind in their mortgage, as you are allowed to pay this "arrearage" over the course of your plan, without interest, and avoid a foreclose, which you might suffer if you had not filed at all or had filed a Chapter 7, absent a satisfactory arrangement with the lender.
    
    
  • Disadvantages Of A Chapter 13
    Chapter 13 is somewhat less preferable than a Chapter 7 in most circumstances because you have to live with the case for three to five years (the usual terms of the repayment plan), and it is somewhat more expensive.

• Chapter 11 Bankruptcy: A Reorganization Plan
  Individuals can file Chapter 11's, although they are mostly utilized to reorganize businesses. Chapter 11's may be suitable for high wage earners who exceed the debt limits which apply in a Chapter 13 or have relatively complex business arrangements. Chapter 11 is pretty expensive and very time consuming. Generally speaking, it is not well suited to people whose debts are the usual consumer debts, mortgages, car loans, and credit cards.

Call Us For A Bankruptcy Consultation
Marc McDonald of our firm has long time bankruptcy experience, and would be glad to meet with you to discuss your various options.