Bankruptcy – Introduction

Chapter 7 process normally takes about four to six months. A Chapter 13 can last between three and five years.

In a Chapter 7 bankruptcy you may ask that the courts discharge most debts. It generally does not include taxes, student loans, alimony, or child support. In return, the trustee can take any property that you own that is not exempted from collections. It is the attorney’s job to help the debtor protect its assets.

In Chapter 13 cases the debtor request a repayment plan with the bankruptcy court to pay back a portion or all of your debt over a period of time. You lose no property when filing for Chapter 13 because your repayment plan is based off of your current income.

Yes. In order to keep the house and car in a Chapter 7 bankruptcy the house and car must be current.

It will depend on your personal situation. To qualify for a Chapter 7 bankruptcy you must meet with certain income limits and take a credit counseling course. There are some exceptions to the income limits such as individuals who are disabled veterans, reservists called to active duty and members of the national guard as well as filers whose debt is more than 50% non consumer debt (business debt).

You cannot lower your payment in a Chapter 7. In a Chapter 13 you cannot lower the payment but you may be able to remove a second mortgage. This is called “lien stripping.”

The first payment is due 30 days after filing. You must make the payment even if you have selected that the payment be done through wage withholding from your employer. If the employer does not make the payment you must make the payment one of the other ways to the trustee responsible for your case.

You should notify your attorney immediately. The attorney may be able to file a motion with the court to temporarily stop the payments to keep your case from getting dismissed. These motions are time sensitive so your attorney must be notified immediately.