Bankruptcy Law

Chapter 7 & Chapter 13 Bankruptcy

Consumer Bankruptcy

Feeling overwhelmed by debt? Unable to concentrate on work and your family obligations?

Are you in need of a fresh start in your financial life? Bankruptcy may be an option to help you regain control over your day-to-day finances. If you fee like you are drowning in debt and do not see a light at the end of the tunnel, reach out to us and see if bankruptcy is an option for you. With over 25 years of experience, our attorneys will be able to answer your questions and guide your through the process if you decide that bankruptcy is the best path forward. We offer a no charge initial consultation during which we will take the time to answer your questions and let you know what options are available to you.

What is Consumer Bankruptcy?

A bankruptcy filing for an individual is called a Consumer Bankruptcy. Individuals can generally seek relief from their debts filing either a Chapter 7 or Chapter 13 bankruptcy petition. Bankruptcy cases are filed in the Federal Court and are administered by a Trustee appointed by the United States Trustee with a Federal Judge overseeing the process. Upon the filing of a Chapter 7 or Chapter 13 Bankruptcy, an Automatic Stay is entered which prevents all creditors from attempting any collection of debts outside of the bankruptcy process.

What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is what most people think of when they hear the term “bankruptcy”. Under Chapter 7, an individual (or married couple), asks the Federal Court for a “Discharge” of their debts. Though all debts must be disclosed in the bankruptcy filing, not all debts will be discharged in Chapter 7. Debts that will not be discharged include child support/alimony, some tax debt and most student loans. General Unsecured Debts will be discharged. These generally include credit cards, personal loans not attached to property, medical bills and collections. A debtor must pass the “Means Test” to qualify for Chapter 7 Bankruptcy. This means that the debtor’s income must be below the State’s median income for a family of their size. In a Chapter 7 Bankruptcy, the debtor must disclose what assets they own, how much they are worth and how much equity they have in each asset. The Trustee assigned to the case will review the assets and determine whether there are any assets that cannot be protected by the debtor’s exemptions which would provide the Trustee some money to pay toward the debts. It is rare for a person to lose any assets in a Chapter 7 Bankruptcy as the available exemptions are quite generous. If an asset is at risk of being liquidated in a Chapter 7 Bankruptcy, the filing of a Chapter 13 Bankruptcy may be preferable.

What is Chapter 13 Bankruptcy?

If a debtor has income above the State limits under the “Means Test”, has assets that cannot be protected in Chapter 7 Bankruptcy or needs to pay back some debts that cannot be discharged in Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy may be a good option. In a Chapter 13 Bankruptcy, an individual prepares plan to repay any debts that must be paid back through bankruptcy, such as mortgage arrears and tax debts, and receive a discharge of the remaining general unsecured debts at the completion of the plan. Typically, a Chapter 13 Bankruptcy repayment period is three to five years. Some debts that are not dischargeable under a Chapter 7 Bankruptcy are dischargeable under a Chapter 13 Bankruptcy. The Means Test will help determine how much an individual must pay back in a Chapter 13 Bankruptcy.

What are the differences between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy?

Both Chapter 7 and Chapter 13 Bankruptcy cases stop creditors from contacting you immediately, prevent creditors from attempting to collect on debts and ultimately lead to the discharge of many unsecured debts. The information needed from an individual is the same regardless of whether they plan to file Chapter 7 or Chapter 13.

The biggest difference between Chapter 7 and Chapter 13 is that Chapter 7 focuses on discharging (eliminating) unsecured debts such as credit cards, personal loans, and medical bills while Chapter 13 allow a person to catch up on missed payments on secured debts such as a mortgage or vehicle loan while also discharging unsecured debt.

Why would someone consider filing for bankruptcy?

Life can throw many curveballs, some of which we can hit and some which we cannot. If life has thrown a person a curveball such as job loss, a medical issue or divorce, it can be extremely difficult to remain current on your financial obligations. If your paycheck is not sufficient to cover your regular living expenses combined with the minimum payments that are due on credit cards and/or other debts, then bankruptcy may be an option to consider. Bankruptcy allows an individual a Fresh Start in their financial life.

Why should someone work with an attorney to file bankruptcy?

Whether or not to file a bankruptcy, and which bankruptcy to file, are difficult decisions. The guidance of an attorney with years of experience in the Bankruptcy Court will make this seemingly daunting process a manageable one. An attorney will let you know what information and documents you will need to gather and assist you in preparing the formal bankruptcy petition. In addition to answering your questions, the attorney will be able to apply your personal situation to the required Means Test which will determine which bankruptcy you may qualify for. An attorney will act as your guide through the bankruptcy process and make sure that not only is a proper bankruptcy petition filed with the Court to start the process, but also will assist you in preparation for the Trustee Meeting that is required with every bankruptcy filing.

Mark has assisted my family during an unfortunate time for us financially. We were struggling, drowning in medical debt from my health issues and his friendly and professional service helped us get back on track. He simplified the process and helped us file quickly and easily. Thank Mark for all of your help!

– Kat Templeton

Frequently Asked Questions

Will I lose my house/car/other asset if I file a bankruptcy?

Generally, no. If a Chapter 7 Bankruptcy is filed, the assigned Trustee will review the value of your assets, the secured liens against those assets and see how much equity you have in each asset. If you have been able to exempt (protect) that equity, the Trustee cannot take your asset. If you do not have enough exemptions available to fully protect the equity, then the Trustee may consider taking the asset and selling it to benefit the creditors of the case. If that appears to be a likely outcome, a person can file a Chapter 13 Bankruptcy and protect their ass

Do I qualify for a Chapter 7 Bankruptcy?

The answer will be determined by the Means Test. This is based on how much total income you have received in the prior six months. If that annualizes out to more than the median income in your state, you will likely need to file Chapter 13. If your income is under the median, the presumption is that you can file Chapter 7. The attorney will gather the information needed to properly prepare the Means Test to review with you and to offer guidance based on the results.

Will I ever be able to obtain credit again if I file bankruptcy?

Yes. Bankruptcy does not prevent a future creditor from offering you credit following the bankruptcy discharge. It is more of a warning to future creditors that you had difficulty with debt in the past. The bankruptcy filing will be on your credit report for 10 years. During that time, potential creditors will look to see how much time has passed since the bankruptcy was filed, what your current income is and whether you are carrying any debts incurred since the bankruptcy completed. Based on this information, the creditor will decide whether to offer you credit and, if so, at what interest rate. Generally, a car dealership will offer a person a loan shortly after a bankruptcy completes, but at a high interest rate. Mortgage lenders will likely consider someone approximately two years after the bankruptcy discharge has been entered.

Mark Cater and his assistant Tracey have been so wonderful to work with over the last few months. They made the bankruptcy process an easy one and I came in knowing nothing on how it worked. I highly suggest giving them a call if you have any questions.

– Samantha Burris