Bankruptcy is a legal proceeding governed by the federal government to aid insolvent debtors and have a fresh start. Declaring bankruptcy enables a debtor to obtain bankruptcy protection that enables him to know his rights on:
- Stopping repossession
- Stopping wage garnishment
- Stopping foreclosure
- Stopping harassment from creditors, debt collectors, and other collection agencies
- Discharging most of the debts such as medical bills and credit card debt but not including:
- Child support
- Student loans
- Tax debts
6. Reorganizing debts for payments missed.
Bankruptcy Chapter 7 vs Chapter 13 in Monroe.
There are several types of bankruptcy that a person may avail for but the most common of them is Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. The difference between the two are:
|Bankruptcy Chapter 7||Bankruptcy Chapter 13|
|In chapter 7 or liquidation bankruptcy, unsecured debts are mostly wiped out. Bankruptcy trustees will take charge of your properties that are not within the bankruptcy exemptions. The properties acquired will then be liquidated or sold and the proceeds will be used to pay back the lenders.||In chapter 13 or reorganization bankruptcy, you will keep most of your property but you will need to have a repayment plan where you will have monthly payments to the bankruptcy trustee to pay off all your liabilities.|
|If you file chapter 7 bankruptcy, the bankruptcy procedure will take about 3 to 4 months to finish.||If you file bankruptcy chapter 13, you must first finish the payment plan that may last from 3 to 5 years, depending on how much you pay.|
|Debtors that have high incomes are not allowed to avail themselves of chapter 7.||Debtors are required to have a monthly income for the payments they need to do monthly.|
|Secured debts can be stopped from being foreclosed if you can keep up with the mortgage payment or else, the foreclosure will continue.||Through the debt-repayment plan, you avoid foreclosure of secured debts because chapter 13 enables you to make up for your past dues. The second mortgage is also eliminated along with reducing your car loan balance.|
|Filing chapter 7 requires the debtors to pass the means test and have an average income below the median income of Monroe.||Chapter 13 does not require the debtor to fall below the median income as long as the secured and unsecured debts are within those prescribed by the bankruptcy law.|
Choosing what Bankruptcy is Fit for You
If you have a lot of property or a high income, you might want to choose chapter 13 because your assets and income determine your eligibility. On the other hand, chapter 7 involves selling most of your possessions, which can be costly for those with many assets. The Bankruptcy Code allows any person to file bankruptcy without the need of bankruptcy attorneys but doing so is very risky because small mistakes with paperwork may lead to your bankruptcy petition being dismissed. If you are considering bankruptcy, we at E. Orum Young Law will help you with your debt problems and obtain debt relief. Our experienced bankruptcy lawyers are knowledgeable in bankruptcy-related matters and we will tailor the best advice for your specific needs. Call us now for a free legal consultation!