Areas Of Practice

Bankruptcy is divided into two main types for the average consumer debtor, Chapter 7 and Chapter 13.

In a chapter 7 case, the debtor requests to the courts that they be absolved from their unsecured debts (such as their visa or mastercard) and either agree to continue to pay on their secured debts (such as their car and home) or they agree to return the items to the creditor.  The property they are allowed to keep, called exempt property, is set by statute.  The property that is not exempt, in other words, property that cannot be protected in bankruptcy can be ceased by the trustee and distributed to the creditors.

In a chapter 13 case, in general, the debtor keeps all of their assets and makes payment to the trustee over a 3 to 5 year period.  Several advantages to a Chapter 13 is that it can allow a debtor to catch up on items they are behind, such as on a mortgage or a car note.  If the main residence has two mortgages on the property, if the first mortgage is underwater (i.e., the first mortgage is more than the home is worth) the second mortgage can be removed and discharged.  In the case where a debtor wishes to keep his vehicle and the amount owed is in excess to the actual value of the vehicle, it is possible to reduce the amount owed on the vehicle to the actual value of the vehicle.  In general, a chapter 13 bankruptcy is more expensive than a chapter 7 bankruptcy, but more assets can be protected in a chapter 13.

Not everyone can qualify for a chapter 7 bankruptcy. When the bankruptcy laws were re-written in 2005, they were changed to make it more difficult for the average working family to qualify for a chapter 7.  That being said there are expenses that can be used to reduce your income so that you can qualify for a chapter 7.  Therefore, if you are considering filing a chapter
7 bankruptcy and are not sure if you qualify for a chapter 7, please speak with an experienced bankruptcy attorney.

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