Chapter 7
Generally, when a person files for Chapter 7 bankruptcy all of his unsecured debt is eliminated. This normally includes debt from personal loans, medical bills and unsecured credit cards. Bankruptcy laws protect the person’s assets from his creditors. Thus, if the person’s assets are all protected under these laws the person will have received a discharge of his debt and his creditors will receive nothing. When debt has been discharge creditors can no longer seek collection actions against the person.
Additionally, simply filing for a Chapter 7 bankruptcy can stop most garnishment actions. When a bankruptcy is filed, creditors are notified of the pending bankruptcy and are normally obligated to stop garnishing the person’s wages.
Call us at 949-689-4430 or fill out the form on this page to find out if a Chapter 7 Bankruptcy can provide the financial relief you seek.
Chapter 13
A Chapter 13 bankruptcy is sometimes referred to as a “repayment plan.” It is generally used by persons who have property that would not be protected or debts that would not be discharged under a Chapter 7 bankruptcy.
Under a Chapter 13 bankruptcy a repayment plan is setup based on a person’s income, debt levels, monthly expenses and amount of property. These items determine how much debt will be needed to be paid back and the length of time the person will be given to pay the debt back.
Some of the advantages of a Chapter 13 bankruptcy are:
1. Home foreclosures are stopped and the person using the Chapter 13 bankruptcy is given time to make up the overdue payments.
2. Additional time for the repayment of delinquent car payments and a delay of auto the repossession of the auto.
3. Additional time for the repayment of child support arrearages.
4. The discharge of tax penalties and interest free repayment of for recent unpaid taxes.
5. The ending of IRS garnishment of wages or removal of IRS levies.
Additionally, similar to a Chapter 7 bankruptcy, a stop is made on a home foreclosure. A Chapter 13 bankruptcy are used to give persons who have suffered one or a number of setbacks some financial breathing room so they can get their finances back on track.
Despite a common perception to the contrary, it is not always the case that a person has to pay back 100% of their debt under a Chapter 13 bankruptcy. Unsecured debt such as unsecured credit cards is paid only when funds remain after the repayment of secured debt. Because of this, the majority of debtors discharge a portion of their debt
Credit card debts and other unsecured debts are paid if and only if funds remain after the debtor has repaid delinquent mortgage payments, auto debts, tax debts, and other secured or priority debts. Thus, the vast majority of debtors filing Chapter 13 still discharge a large portion of their unsecured debts.
To find out if a Chapter 13 bankruptcy is right for you, please call us at 949-689-4430 or fill out the form on this page.