Types of Bankruptcy

Chapter 7 Bankruptcy

People often find themselves overwhelmed by bills and in need of a "fresh start." By filing a Chapter 7 Bankruptcy, certain debts can be eliminated giving the debtor the fresh start they so desire. Generally speaking, a debtor in a Chapter 7 Bankruptcy can keep any property that he/she owns outright, and also those secured items that are current and affordable.

How can Chapter 7 Bankruptcy help me?

A Chapter 7 Bankruptcy (also known as "liquidation bankruptcy") can eliminate a debtor's liability on most unsecured debts, such as credit cards, personal loans, medical bills and repossession or foreclosure deficiencies. It may also discharge the debtor's liability on any secured debts such as a home or car loan where the collateral is given back to the lender.

Who can file for Chapter 7 Bankruptcy?

Chapter 7 Bankruptcies are available to individuals, married couples, sole proprietorships, partnerships and corporations. Debtors are required to attend a meeting of creditors approximately one month after a case is filed. The bankruptcy is typically completed in 3-4 months from the date of filing. Upon completion, the debtor's includable debts are eliminated or discharged, meaning that the debtor no longer owes on those debts after the bankruptcy.

What's the first step?

If you're contemplating filing for bankruptcy, chances are that you're already very stressed and overwhelmed. Chapter 7 Bankruptcy can be confusing at the best of times, so it's important to hire a firm of experienced attorneys who will provide you with the support you need to get through this trying time. At Friend Younger, we will guide you through each stage of the Bankruptcy process and ultimately put you on a path towards rebuilding your credit. Contact us to arrange a consultation.

Most debts can be discharged in a Chapter 7 Bankruptcy EXCEPT:

  • Most taxes
  • Debt incurred through fraud
  • Child and spousal support
  • Fines (including those related to drunk driving and criminal charges)
  • Student loans

Chapter 13 Bankruptcy

Known as a “reorganization bankruptcy,” Chapter 13 bankruptcy allows individuals to consolidate their debts into one monthly payment over a 3-5 year period, while generally paying less than 100% of unsecured debts. It can also lower interest rates on some secured debts, like car loans. Because you are continuing to pay on your secured debts, you will likely be able to keep all of your property.

Chapter 13 is ideal for catching up on missed mortgage, car and outstanding tax payments. Because you will be catching up on missed payments, Chapter 13 bankruptcies generally prevent foreclosures and repossessions. For those who owe more on their first mortgage than the property is worth, a Chapter 13 allows you to remove any junior mortgage or equity line secured against your real estate.

Depending on your income, expenses, and assets, you will only pay back a portion of your unsecured debts such as credit cards, personal loans, medical bills and repossession/foreclosure deficiencies. The attorneys at Friend Younger will work with you to propose an affordable repayment plan.

At Friend Younger, we will guide you through each stage of the bankruptcy process and ultimately put you on a path towards rebuilding your credit.

Possible Advantages of a Chapter 13 Bankruptcy include:

  • Eliminates a second or third mortgage on your home
  • Lowers payments on car loans
  • Prevents Foreclosures by allowing the borrower to catch up on missed payments over a 3-5 year period without incurring additional interest or penalties
  • Stops the accrual of interest on tax debts
  • Protects cosigners who are not filing bankruptcy
  • Keep property that might be subject to liquidation in a Chapter 7
  • Allows you to continue operating your small business

For more information about the process of Bankruptcy, visit the US Bankruptcy Court website.

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