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Practice of Law -- Bankruptcy Services

Chapter 7, Chpater 13, and Chapter 11

Chapter 7 Chapter 7 is a complete liquiidation of all debt. If approved (called a "discharge"), the Court will relieve the debtor of all further obligation on any debt included in the bankruptcy petition.

Through counsel, the debtor files a petition with the bankruptcy court. This filing includes a means test to determine eligibility for filing a chapter 7 case, a list of his/her assets, debts, and income, and a list of those assets the debtor wishes to retain (called claiming an "exemption"). The process of preparing the petition is the most time consuming aspect of the bankruptcy process for both the debtor and counsel.

There is no repayment plan for a chapter 7 case -- all debts are liquidated. However, that also means that nothing is retained, and any lienholders have the right to file to possess the property under lien if you retain it after bankruptcy. A bankruptcy does NOT discharge secured property liens if you claim the property as an exemption. The chapter 7 will discharge debts only (loans and amounts owed). That means, for example, that if you are able to claim your house an an exemption, even though the mortgage is dissolved (discharged) in bankruptcy, the bank still maintains a lien on your house for the amount of the original loan. Although the bank cannot demand payment, it may foreclose and sell the property to satisfy the lien. These are complicated considerations. Be sure to speak to one of our attorneys BEFORE filing anything in a bankruptcy situation. CONTACT US NOW!

Chapter 13 This is another common form of bankruptcy where the debtor wishes to retain his/her property during the pendancy of the bankruptcy, and after the discharge of the debts. As discussed before, in a Chapter 7, you will lose any property that the trustee can liquidate to repay debts; andything that is retained by the debtor as exempt is subject to foreclosure or repossession by the creditor if a lien is present. In a Chapter 13, the creditor is forced to accept a repayment plan, and if properly paid during the Chapter 13 plan period, cannot reclaim their property. At the end of the plan, any remaining debts are discharged.

  • * Requires Credit Counseling (just as in a Chapter 7).
  • * Required a repayment plan (either 3 years or 5 years depending on your income level)
  • * During the repayment plan, you must stay pay both the amount due currently AND the repayment amount per the plan
  • * After the plan duration, if all plan payments have been made, remaining debts are fully discharged.
  • * There are income requirements for this type of bankruptcy.

Help Fast! We Understand.

"We needed a fresh start. My wife's medical bills just got out of hand, and the collectors were calling EVERY day. You helped us try everything to resolve the debts, but when the only reasonable apporach was Chapter 7, you handled everything. Most importantly, you took the time to explain the process, meet with us several times, and ensure things went smoothly. Thank you, Thank you, Thank you!"

-- The Pratellia Family (clients), Bankruptcy, 2012

You STOPPED the Creditors!

"Being called on my cell and home line was frustrating and embarrassing. I don't even know how I got into such debt, but at least one of the creditors was really rude and demanding. You set them straight! Finally, a win for the little guy. I know I have a lot to do to clean up my credit, but you showed me how, and at least I can do it without being attacked! Thanks!"

-- Ms. O'leighton (client), Bankruptcy, 2012

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Types of Bankruptcies

CHP 7: This type of bankruptcy allows the debtor to liquidate all debt and start with a clean slate. However, exemptions are few, and all assets not exempted are seized by the trustee for sale. You must pass a "means test" to qualify for this type of bankruptcy.

CHP 13: Less common, a chapter 13 allows the debtor to restructure their debt, and forces creditors to work with the debtor to create a re-payment plan. During the repayment plan, no interest can be charged. So long as the debtor faithfully makes all payments under the plan, all remaining debt is discharged after a period of time (usually 5 years). There is no liquidation, so the debtor retains all property while the repayment plan is in effect. Essentially, this is a refinance plan that creditors must accept at 0 interest. Best used when tangible asset protection (personal or business property) is a consideration.

CHP 11: This is generally reserved for business. Similar to a chapter 13, a chapter 11 is also a structured debt repayment plan. However, unlike a chapter 13, there is no trustee that supervises the repayment or receives payments for disbursement under a repayment plan. Once the repayment plan is approved by the court, challenges and oversight, when required, are handled directly through court filings.