What is Bankruptcy?

The bankruptcy law is designed for people who find themselves with debt that is overwhelming or unmanageable. It is an organized way to deal with all of your debts in one place in one process.  The process involves making a full financial disclosure of all of your assets, all of your debt as well as a budget of income and expenses. There are different chapters of bankruptcy depending on your circumstances.

Chapter 11

Chapter 11 bankruptcy is a business reorganization. It is expensive and complex. It is not for most people or most situations.

Chapter 13

Chapter 13 bankruptcy is a wage earner plan. It is for people with regular income. Disposable income is committed and paid, typically from your paycheck, to a Chapter 13 trustee. The trustee disperses the monies to creditors according to various categories of debts. This type of bankruptcy is appropriate for people who fell behind on their mortgage payment and need a payment plan to catch up on the arrears or their income is too high to qualify for a Chapter 7 bankruptcy.

Chapter 7

A Chapter 7 bankruptcy is the most common type of bankruptcy. If your income is not too high then you may discharge your debt, typically unsecured credit card debt, in this bankruptcy. The law allows you to keep certain assets when you file bankruptcy which may include your primary residence if there’s not too much equity in it, an automobile if there’s not too much equity in it, retirement accounts and typical household goods, clothes and furnishings among other things.

Complimentary Strategy Session

To determine whether your situation is appropriate to file bankruptcy, and if so, the appropriate chapter, call now to schedule a complimentary strategy session.

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