How filing bankruptcy can help you.

Many of my clients first see me when they are about to lose their house, or car, or the IRS has levied their wages. Some come because of a lawsuit or judgment, others come when they can't take the bill collectors calls any more, or when they have run out of cash advances and new credit card offers which they had been using to shift the bills from one card to another. Some come only after they have depleted their savings and retirement accounts, or sold a car to pay their credit card installments, only to find that their sacrifice didn't fix the problem; it simply delayed it. Bankruptcy relief, under bill consolidation or straight Chapter 7, can stop the foreclosures, the levies, the repossessions, the garnishments, and give you the breathing room you may need to catch up on your house payments, or your car payments, or pay back taxes. Some old taxes may even go away entirely!

And you generally get to keep all your exempt property.

So, let's look at how this works. We will focus on Chapters 7 and 13, which are most often used by individuals. There are also ways of reorganizing troubled businesses through Chapter 11 and 13, but this is very complex and must be analyzed on a case-by-case basis. As a board certified specialist in business bankruptcy, I can work with you to explain how reorganization may help you to save your business or make it more profitable.. If you have a business problem, please call my office for a separate consultation.

Chapter 13, often called bill consolidation or a wage earner repayment plan is available for people who have some money left over each month after their necessary living expenses. This is used to repay debts over a three to five year period under current law. Chapter 13 enables people to catch up on past-due house payments, child support, taxes, and other problem debts, all while under the protection of the Bankruptcy Court. This protection, called the "automatic stay", begins at the moment you file a petition in bankruptcy, under any chapter by the way, and prevents your creditors from taking any further actions to collect debts or repossess collateral without first obtaining a court order from the Bankruptcy Court. This means that the filing of your bankruptcy petition will block a threatened foreclosure of your house, will stop an IRS wage levy, will stop the repossession of your vehicle. And this protection will stay in place as long as you can provide for these debts through your Chapter 13 plan.

In Chapter 13, we can often reduce payments on vehicles, furniture and other secured debts, and protect co-debtors while you repay joint consumer obligations. Depending on your income and expenses, you may also repay a portion of your credit card debt, although there is no present requirement that you must do so. All of this is accomplished through a Chapter 13 plan which I prepare for you. You simply make one monthly payment to the Chapter 13 Trustee for the three to five year period we determine, and the trustee pays the creditors set out in your plan after court approval At the end of your plan, you are discharged from all remaining dischargeable debts.

Chapter 7 does not offer as many options as Chapter 13. It is primarily used by people who have no money to repay debts beyond their regular living expenses or by those who are not otherwise eligible for Chapter 13. There is no repayment plan in Chapter 7. Chapter 7 will discharge your personal liability on most credit card debt. However, it will NOT enable you to restructure secured debt, catch up on past-due house or vehicle payments, repay taxes or deal with other problem debts.

When you come to my office, we will look at the kinds of problems you have and your income and expenses and determine which Chapter will best suit your needs.

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