Is Liquidation or Reorganization Bankruptcy Better?
What repels most people from bankruptcy proceedings is that they stay on your credit report for up to ten years. Indeed, filing for bankruptcy will affect your credit score. However, rebuilding credit after bankruptcy is not as difficult as it sounds.
Many debtors look into filing a bankruptcy petition to benefit from the automatic stay, which protects you from collection calls from creditors and harassment from debt collectors. Such bankruptcy protection can generally help you stop wage garnishment. It could also help stop foreclosure or repossession of your home, car, or other personal property.
Before filing for bankruptcy, it is highly advisable to seek legal help from a trusted Monroe bankruptcy attorney. Experienced and hands-on bankruptcy attorneys can assist you on how to file and help you have a successful bankruptcy case.
This article focuses on Chapter 7 and 13 bankruptcies. It is divided into the following sections:
- Pros and Cons of Declaring Bankruptcy
- Chapter 7 and Chapter 13 Bankruptcy Cases
- Working on a Chapter 7 Bankruptcy Proceeding
- Working on a Chapter 13 Petition for Bankruptcy
- Taking Bankruptcy Petitions Very Seriously
- Weighing in on Liquidation and Reorganization Bankruptcy Cases
- Bankruptcies and the Need for Legal Advice
Pros and Cons of Declaring Bankruptcy
Given the current situation, having to pay back credit card bills, medical bills, and personal loans can be especially difficult. Consequently, trying to stop repossession, foreclosure, or even wage garnishment can also be very challenging.
While rebuilding credit after bankruptcy can indeed be challenging, it should be reassuring to know that it is doable. The pros almost always outweigh the cons. Monitoring your credit regularly and adjusting certain behaviors also help in establishing credit.
Very broadly, a Chapter 13 petition for bankruptcy will enable you to restructure or reorganize your finances. Proceeding with restructuring will allow you to work on making payments for secured debts. On the other hand, a Chapter 7 bankruptcy case will likely have your unsecured debts (such as personal loans, medical bills, credit card bills, and other loans with no collateral involved) discharged or forgiven.
A seasoned bankruptcy attorney in Monroe, IL can further explain the differences between these two.
Chapter 7 and Chapter 13 Bankruptcy Cases
Experienced bankruptcy lawyers in Monroe can look into your specific circumstances and help you decide on the debt relief option or filing chapter that is most suited for you.
There are certain cases where declaring bankruptcy is the most appropriate choice, especially if other debt-relief options are not applicable. As such, before working on bankruptcy proceedings, it is best to have thorough discussions with your lawyer.
Explain to him or her all aspects of your finances, such as your regular income, total unsecured debt, and total secured debt. Be sure to mention if a petition in bankruptcy had been filed in recent years, or if a bankruptcy petition was dismissed because of failure to appear or comply with a court order.
Working on a Chapter 7 Bankruptcy Proceeding
As mentioned above, if you are generally dealing with secured debt, have a lot of assets, or if it would be possible for you to pay back some of what you owe to your creditors, a Chapter 13 bankruptcy petition may be suited for you.
However, for bankrupt individuals with a few assets whose problem debts include credit card debts, medical bills, payday loans (or other debts that a bankruptcy discharge may wipe out), filing Chapter 7 may be more ideal. It is also often recommended for filers whose problem debts exceed two-fifths of their annual income and cannot, therefore, pay off debts even with extreme measures.
Before one can file Chapter 7 bankruptcy forms and paperwork, he or she must first pass the bankruptcy means test. Here, the filer’s monthly income and living expenses will be taken into account. If you pass, your bankruptcy trustee will then facilitate the meeting of creditors, sell your nonexempt assets, and pay creditors in a manner according to the bankruptcy code.
Working on a Chapter 13 Petition for Bankruptcy
Filing for bankruptcy and proceeding with restructuring will enable you to bring current payments for secured loans. This can stop foreclosure or repossession of collateral (such as your home, car, or other personal property), which is a common reason people opt to file for bankruptcy under Chapter 13.
If you filed for bankruptcy Chapter 13, you would be given a repayment period of three or five years. Under pertinent bankruptcy laws, however, not everyone can proceed with filing Chapter 13. It is, in fact, sometimes referred to as wage earner bankruptcy because a low-income earner may not be qualified to file.
Before filing bankruptcy under this chapter, your monthly income must be regular, and your tax filings must be current. Additionally, no Chapter 13 must have been filed in the last two years, no Chapter 7 filing must have been filed in the last four years, and no bankruptcy petition must have been dismissed in the last 180 days (for failure to appear in court).
Taking Bankruptcy Petitions Very Seriously
It is almost impossible to find someone who dreamt of declaring bankruptcy for debt relief. However, if you are struggling financially, considering bankruptcy could be the best (or even only) option for you. Through the different bankruptcy chapters, countless people who were once bankrupt eventually had a fresh start in life.
Filing for bankruptcy erases most of your unsecured debt. While recent tax debt, criminal fines and penalties, student loans, alimony, and child support are generally not dischargeable, a bankruptcy declaration can enable you to repay these debts on time.
If you have any concerns related to the bankruptcy procedure, or if you are still unsure if it is best to file for bankruptcy, hire the best attorneys who will work closely with you. Call us at E Orum Young to know how we can help.
Weighing in on Liquidation and Reorganization Bankruptcy Cases
There are different types of bankruptcy that you may choose from, depending on your eligibility. Under each are different bankruptcy rules and requirements that you must be aware of before you can declare bankruptcy.
If you require debt relief and intend to file bankruptcy Chapter 7, a trustee will liquidate your non-exempt assets to pay off priority lenders. However, you must first pass the bankruptcy means test to be qualified to file bankruptcy under this chapter. Under relevant bankruptcy laws, your monthly income and living expenses will determine your eligibility as a filer.
On the other hand, in a Chapter 13 bankruptcy, you will have the chance to restructure your overwhelming debts and bring current payments for secured debts (those with collateral). You can essentially avoid foreclosure and repossession by proposing a payment plan to the bankruptcy court. Here, the debt repayment plan will run for three to five years. Well-trained and diligent bankruptcy lawyers in Monroe can further explain these things to you.
Bankruptcies and the Need for Legal Advice
If you are considering bankruptcy, it is best to seek legal assistance from an established bankruptcy law office. For one, bankruptcy attorneys will help document your eligibility to a bankruptcy trustee.
Formally submitting your bankruptcy petition is key if you wish to benefit from the automatic stay (and prevent lenders and debt collectors from contacting or harassing you). Additionally, your lawyer can help you go through the scheduled Meeting of Creditors and subsequent confirmation hearing. All these can be overwhelming, which is why getting reliable legal services is key.
Aside from helping you fill out bankruptcy forms and prepare the necessary paperwork and supporting documents, a good local attorney can brief you on what to expect throughout the entire bankruptcy process.
Contact us at E Orum Young today!
As mentioned, a bankruptcy petition will stay on your credit report for several years. However, while building your credit after bankruptcy can be quite challenging, it is not impossible. If you regularly check your credit report and take into account your credit utilization ratios, credit payment patterns, and repayment history, you can raise your credit score in a few months.
If you have any concerns about the above bankruptcy procedure, or if you are still unsure if it is best to file for bankruptcy, hire the best attorneys who will work closely with you. Relay your questions to a legal professional from an established bankruptcy law firm and avoid hiccups and issues. Contact our Monroe bankruptcy attorneys at E. Orum Young Law for a free consultation.