Should I File for a Chapter 7 or Chapter 13 Bankruptcy?
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcy can generally be described as "liquidation" or "reorganization."
Both kinds of bankruptcy have numerous rules and exceptions to those rules, about what kinds of debts are covered, who can file, and what property you can and cannot keep.
Call our offices today to find out if bankruptcy is right for you.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is generally the simplest and quickest form of bankruptcy. Individuals, married couples, corporations, and partnerships may file in chapter 7. To begin your bankruptcy, our law offices will file an official petition, schedules, and statement of financial affairs to the bankruptcy court.
As soon as your bankruptcy case is opened by the court, an "automatic stay" will go into effect. This "automatic stay" prevents creditors from trying to collect on your debts; it preserves your real and personal property from repossession or foreclosure and safeguards you from being sued.
Your bankruptcy paperwork will be reviewed by a court-appointed trustee, who will gather and sell your nonexempt property, using the proceeds from the sale to pay your creditors. There are two property exemption systems used in California, and our offices will be able to determine which system will work best for you, depending on the type of assets you own. Depending on the exemptions you choose, you may be able to keep your car, house, or other personal belongings.
30 to 40 days after filing your Voluntary Petition with the bankruptcy court, the trustee will hold a "341" meeting or "Meeting of the Creditors." This hearing allows the bankruptcy trustee and your creditors to attend and ask you questions under oath regarding your bankruptcy petition and any documents you provided to the trustee. You must be present with your attorney at the 341 meeting.
Note that a Chapter 7 bankruptcy will not prevent a repossession or foreclosure, but it will temporarily stop the foreclosure process during the pendency of your bankruptcy. The lender can then petition the court for an order to foreclose or wait to foreclose when your bankruptcy case is closed. If you wish to keep your home, you will need to continue making your monthly mortgage payments before, during, and after the bankruptcy proceeding. You need to keep your mortgage current, meaning that you will need to make up any missed mortgage payments prior to filing your petition.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the most common type of "reorganization" bankruptcy for consumers. You will be able to retain all of your property, but you must make monthly payments over three to five years to repay all or some of your debt.
Our offices will create a repayment plan that describes in detail how you will pay each of your debts. In a Chapter 13 plan, you must pay some debts in full, such as child support, alimony, a car loan, and a mortgage. On your unsecured debts, such as medical bills and credit cards, you will only have to pay a portion or, in some cases, none.
The length of your plan will depend on how much you earn and how much you owe. Once you complete your repayment plan, all your remaining eligible debt will be wiped out, and you will still have your property!
Debt Settlement
In some cases attempting to settle your debt before deciding to file for bankruptcy may be the best choice for your situation. Our offices will negotiate with your creditor(s) to forgive a percentage of your total account balance for a substantially reduced lump sum payment.
Unsecured debts such as medical bills and credit cards may be settled. Secured debts such as mortgages, auto financing, and student loans may not be settled. Call our office today to find out the best solution for your debt.
Free Consultation
Receive a free 30-minute consultation.
During your consultation, Gregory S. Duncan will review your legal issue and discuss the best course of action. All communication is held in the strictest confidence.
Call us today! Office: (760) 729-2774 or complete our online form.