Getting A Fresh Start

One of the hardest processes to accept is the filing of bankruptcy. After the hard economic times, our country has faced throughout the past few years, we understand that times can get extremely difficult and that you feel like you are just underwater in debt. You try so hard to get your head above water. But, it is just nearly impossible based on unexpected debt that has incurred. Many clients tell us, “I feel like I am robbing Peter to pay Paul.” This is not a way to live. We also understand that creditors can be harassing and difficult to handle when they are calling. But understand, there is a help. There is a way out. Bankruptcy can be a lifeboat that brings you back to shore when your finances are sinking. No, it is not going to look good on your credit; however, it is a chance to start a new. You will begin a better lifestyle after the process is finished.

Chapter 7

You may be able to use Chapter 7 to provide you with many benefits.

It is for people with few or secured assets that they are willing to give up.


Chapter 7 is the type of bankruptcy that liquidates your debts except those that cannot be discharged. It lets you keep basic assets, like household goods, a certain amount of equity in your home or car, and all retirement and pension funds. There is no payment plan and the entire process to the date of discharge could be as short as 120 days.

You can stop a pending foreclosure for a number of months, even if it is your intent to walk away from a mortgage you cannot afford. It will stop the foreclosure process and give you the time needed to find a new place to live. The mortgage company would file a motion for relief, which usually takes one month to complete. The lender would then have to start the foreclosure process all over again. You could have an additional 3-4 months in the home. Chapter 7 does not allow you time to catch up on your mortgage. Most people, if behind, will surrender their home. It will give you some time to move at your discretion.

If you intend to keep any secured creditor’s collateral, ex. an automobile, you must keep the payments current.

Under Chapter 7, you pay the court costs and attorney fees before filing.

Chapter 7 bankruptcy may eliminate most kinds of unsecured debt. Some examples of unsecured debts Chapter 7 may eliminate are credit cards, medical bills, most personal loans, judgments resulting from car accidents and deficiencies on repossessed vehicles.

In addition to getting rid of your debt, Chapter 7 typically allows you to keep all of your property. As long as your car and mortgage payments are current, and there is no significant equity in your property, we should be able to request the creditor to allow you to reaffirm the debt.

Keep your home, keep your car, keep your personal belongings, but eliminate your debt: that is our goal with Chapter 7. You may be able to use Chapter 7 to provide you with many benefits.

Chapter 13

Are you trying to save your home from foreclosure? Is the “repo” man looking for your car?

Chapter 13 is for people with income and with assets that they do not wish to lose. Your main attention is to preserving your assets.

Chapter 13 puts an immediate stop to foreclosures and repossessions. It allows you up to five years to catch up the missed mortgage payments or to pay your secured creditors. Most times we are able to reduce the interest that you are paying on your cars and the other creditors, but not your mortgage.

In many cases, you can wipe out some or all of your credit card debt as well as any other unsecured creditors. It is a good opportunity to keep home, cars and personal property when you need time to catch up.

Under Chapter 13, you are making payments to a trustee, usually by payroll deduction, who in turn pays the creditors your attorney has proposed under the “Plan”. Your unsecured creditors could receive anywhere from 100 cents on the dollar to 0 cents on the dollar with no interest. It is all based on your income and normal living expenses.

Chapter 13 bankruptcy is a debt repayment plan through which you consolidate your debts and make a payment on your debt over a three- to five-year period. While in a Chapter 13 debt repayment plan, the creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.

Immediately upon filing and your creditors being notified, they must cease all communication with you as the court will issue an automatic stay. This includes foreclosures, repossessions, wage garnishments, harassing bill collection calls and collection letters. You will be protected from these until your case pays out.

One very important thing to remember about Chapter 13 bankruptcy is that you must be working or have a consistent source of income for your repayment plan to be approved by the court. Not only must you be able to pay for your monthly living expenses, but you must also be able to make a payment to the court to consolidate your debts.

Debts that are generally consolidated in a Chapter 13 bankruptcy are mortgage arrears, balances on vehicle loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 bankruptcy consolidation.