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Speak to Brent M. Lamkin, attorney-at-law, regarding your specific bankruptcy situation. Mr. Lamkin will give you a free expert legal consultation of all of your options and tell you how you can protect your assets, retirement, government benefits, automobile and your home. He will also tell you how you can build up your credit again. The more information you have the easier it is to go to the next step!
Bankruptcy is a formal legal proceeding for dealing with one’s creditors. The primary purpose is to allow you to get a 'fresh start' for your financial future. A bankruptcy discharge will permanently wipe out the debts that you owe so that you will not have to repay them.
When a bankruptcy is filed, creditors must immediately stop trying to collect on the debts that you owe them. They are no longer allowed to send you letters or call you about the debt. If they have started a lawsuit against you, they must stop the proceedings. If they have started to garnish your paycheck, bank account or income taxes, they must stop any further garnishment. You can even stop a home foreclosure (provided that there has not yet been a sheriff’s sale) or vehicle repossession (provided that the vehicle has not been sold at auction).
Bankruptcy cases are filed in the United States Bankruptcy Court, utilizing one of the various chapters. A chapter is simply the section of the Bankruptcy Code that describes the type of bankruptcy that is being filed. For example, most individuals file bankruptcy under either Chapter 7 or Chapter 13. Businesses file bankruptcy under either Chapter 7 or Chapter 11.
Most debts can be discharged in bankruptcy. This would include credit cards, gas cards, medical bills, utility bills, car and home debts (if you decide to surrender the car or home), and even some (but not all) income tax debts. Some debts, however, are not allowed to be discharged by bankruptcy. This would include student loans, child support, spousal support (alimony), and debts related to fraud.
Many individuals who file bankruptcy are able to keep most of their assets, including their house, car, retirement assets and bank accounts. This varies however, in each individual case. Significant factors to consider include the value of the asset, whether there is a lien on it, and whether you are current with payments. At Nichols & Eberth, P.C., we can advise you on whether your assets can be protected in a bankruptcy.
A Chapter 7 bankruptcy is one where you are simply discharging your debts, and not repaying your debts. It is sometimes called a “straight” bankruptcy. It can be filed by an individual or a married couple.
To qualify to file Chapter 7 bankruptcy, you must pass the “means test”. There is a two-step analysis involved in this process.
In addition to the "means test (the two-step analysis qualifying process):
A Chapter 13 is a type of bankruptcy where you enter into a structured repayment plan to repay all or a portion of your debts. It can be filed individually or as a married couple. Typically, people who file Chapter 13 fall into one of three categories: (1) their income is too high to qualify for Chapter 7; (2) they have an asset that they cannot protect from creditors in a Chapter 7; or (3) they can file Chapter 7, but they choose to file Chapter 13 because it allows them to do something that they cannot do in Chapter 7.
In a Chapter 13, the bankruptcy court requires that you make a “best effort” to re-pay your debts, but only in an amount that you can afford to pay each month. The court does not expect you to starve so that creditors can be paid. They do consider your “take home” pay and your regular living expenses, before arriving at a “best effort” payment.
Monthly payments are made to a court-appointed trustee, who pays your creditors. You may be able to pay your house and car payment on your own, provided that you are current with those payments when you file the Chapter 13.
As long as you make all of the payments, at the end of the repayment plan, you will receive a discharge of the remaining debt.
There are some unique provisions available in Chapter 13 that are not available in Chapter 7. This is why some people choose Chapter 13 over Chapter 7. For example, you can remove a second mortgage (a/k/a home equity loan) from your home, so that you are left with one mortgage at the end of the bankruptcy. You can use the Chapter 13 to catch-up house payments over time and prevent foreclosure. At Nichols & Eberth, P.C., we can advise you in more detail on how Chapter 13 works.
Bankruptcy law is a complex area requiring the services of a professional. At Nichols & Eberth, P.C., we can help guide you through the process from filing to discharge. We offer a free expert legal consultation.