Chapter 7 gets rid of most debt and just leaves you with debt secured by property you want to keep (i.e. house, car and furniture). A few debts don’t go away - student loans, most taxes, child support and alimony and a few others that may be individual situations.
1. You cannot have filed a chapter 7 in the past eight years
2. Your income must qualify you for chapter 7. This is why I have to see the past six months of pay stubs (the documents needed for your appointment are set out in the information sheet we send you)
3. You need to be current on home and or car if you are planning on keeping these items.
Chapter 13 consolidates your bills and allows you make payments over three to five years. The time and amount depends on the specific case. Interest is only paid on secured accounts and you only pay your unsecured creditor – credit cards, medical bills - based upon what you can afford to pay and within court set guidelines. The difference between this and a credit counseling company is that the creditors have to accept the proposed plan if it falls within the court's guidelines. Chapter 13 bankruptcies can stop foreclosures, repossessions, garnishments and tax penalties and can also work to recoup repossessed vehicles if filed within a certain time period after the repossession.
At the end of the five years, any debt that isn’t paid off is discharged or wiped out, with certain exceptions - taxes, student loans, child support, maintenance.
If you do not qualify for chapter 7, we look at chapter 13. Each case is different, so I will come up with the best solution for you based on the information provided.
To figure out the payment, we take care of living expenses first and see what is left over to pay on the bills. This amount can be affected by secured accounts that the client want to keep and debts that have to be paid.
Yes absolutely. There is a myth that the bankruptcy reform stopped you from filing on credit card debt. It is actually easier now than it was before the reform.
Yes, but only in a chapter 13 and I need to be sure that the client can afford the house payment before we attempt this. The client resumes making their regular mortgage payment as soon as their case is filed. The amounts that the client is behind on the mortgage is paid back over the length of the chapter 13 plan.
Once a case is filed we can stop garnishments and we will also look to see if there is a way to recoup garnished funds. This is addressed at your initial appointment.
No, someone will not take your belongings unless you used the property to secure a debt and now you can’t afford to pay this debt. The courts allow you to own property – real and personal, including cars. I look at all of the options to propose solutions, but at the end of the day the income has to be there to cover the debt that the client wishes to keep.