Chapter 7 is considered debt liquidation. It has been called “total bankruptcy” or “straight bankruptcy” but it simply means that you are asking the bankruptcy court to eliminate all your liability on your unsecured debts such as credit cards, medical bills, and personal loans. You can also get rid of your liability on a secured debt by surrendering the asset (e.g. home, auto, furniture) that the secured lien is attached to. Alternatively, you may be able to keep your assets by agreeing to continue making the payments to the lienholder. Finally, certain debts cannot be eliminated in Chapter 7 (e.g. student loans, child support).
Under the 2005 Bankruptcy Abuse and Consumer Protection Act, you must qualify for Chapter 7 before your case will be approved by the court. Most people still qualify despite this change in the laws. Brackett & Strunk offer a free consultation so you can discuss your case with an attorney and find out whether Chapter 7 is right for you. You could be debt free in a matter of months!
“Brackett and Strunk treated me like family. They are very friendly and easy to work with.” – Rita, Knoxville
Reorganization under Chapter 13, sometimes referred to as a “wage earners’ bankruptcy,” allows individual(s) to repay their debts. Payments are made to a Chapter 13 Trustee who then distributes them pursuant to bankruptcy guidelines. The repayment plan is usually completed in three to five years.
The automatic stay of a Chapter 13 stops most debt collection efforts. Chapter 13 can stop foreclosures, wage garnishments, collection calls and letters, and could even require the return of a repossessed vehicle. Secondary mortgages can sometimes be stripped-off, paid as an unsecured debt, and discharged at the completion of the Chapter 13 case. Although certain priority debts are non-dischargeable, such as alimony, child support, student loans and certain taxes, these debts could be paid in full through a Chapter 13 reorganization.
Chapter 13 payments are unique to each debtor’s situation, but are based upon basic factors including the debtor’s disposable income, the value of her assets as well as the amount of her secured debt. Chapter 13 can protect assets that may otherwise be liquidated in Chapter 7 proceedings. Chapter 13 can even protect a non-filing co-debtor.
“Brackett and Strunk kept working for us even after our bankruptcy was completed! They stopped the harassing creditors and helped us understand how to rebuild our credit.” – Catalina, Knoxville