Filing for Bankruptcy May Help You 

Millions of Americans struggle with debt. Credit cards, medical bills and mortgages can add up, and one small setback can make moving forward difficult. Bankruptcy is a legal process designed to eliminate debt and stop collection calls.

Chapter 7 and 13 are designed to erase debt and stop foreclosure and other collections. Let the law work for you.

Bankruptcy Laws in 2018

While bankruptcy laws are known to change periodically, there have been no new laws passed that affect bankruptcy filings. Filing bankruptcy in 2018 will likely be unchanged from recent years. The last major bankruptcy law change was enacted in 2005. Some smaller changes to the bankruptcy process, such as the median income to qualify for Chapter 7 are changed periodically based on census data.

If you've been considering bankruptcy as a debt-relief tool, filing in 2013 shouldn't provide any new challenges from previous years, but it may be in your best interest to discuss your case with a bankruptcy attorney before filing.

There are two main forms of bankruptcy protection for individuals:

Chapter 7 is designed to eliminate unsecured debts, such as credit cards, medical bills, store cards, utility bills, payday loans and other debt not tied to property.
Chapter 13 is designed to stop foreclosure (save your home) and reorganize debts into an affordable monthly repayment plan.

Each type of bankruptcy involves a different process and may produce different results, based on your unique financial situation. Here's a breakdown:
Filing Under Chapter 7 of the U.S. Bankruptcy Code

Also called "straight" bankruptcy because of the quick relief it offers, this form of bankruptcy is frequently known as "Chapter 7" for the section of the bankruptcy code that outlines how it works.

If you want to eliminate unsecured debt like credit cards, payday loans, utility bills, medical debt and some personal loans, filing bankruptcy under Chapter 7 may be an option.

Chapter 7 bankruptcy is usually a viable option for people with lots of unsecured debt and little income, such as an unemployed person who's been using credit cards or payday loans to make ends meet.If you want to file Chapter 7, you'll have to take the Chapter 7 means test to see if you qualify. But don't worry, most people who want to file Chapter 7 are able to. It's a myth that the "new" bankruptcy law made it so no one can file for bankruptcy.

The means test determines whether your income is low enough to get your debts discharged. There are two steps to the means test:

Step One: Compare your income to the median income in your state. Generally, if you "pass" the first step, you don't have to do the second step.

Step Two: Compares your disposable income and your unsecured debt.

See how your income stacks up. Find out your state median income, then talk to a lawyer about your legal right to file bankruptcy.

Keep in mind, if you don't "pass" the means test, you may still be able to file Chapter 13 bankruptcy and work to repay your debt (interest-free) over time.

The Repayment Option through Chapter 13 of the Bankruptcy Code

If you're facing foreclosure or looking for an interest-free repayment plan, Chapter 13 bankruptcy might help you out.

Under Chapter 13 bankruptcy, the court places you on an interest-free payment plan that usually lasts three to five years. During that time, you make one lower monthly payment directly to the bankruptcy court (no more dealing with creditors). They, in turn, make payments to your creditors according to a priority set by the court.

At the end of your repayment period, you may even qualify to discharge your remaining unsecured debt (such as credit card bills, medical debt, utility back payments, etc.).

Chapter 13 bankruptcy is typically an option for people who have steady income but have fallen behind on their bills.

In many cases, Chapter 13 bankruptcy can stop foreclosures thanks to the protection of the automatic stay and the chance to repay mortgage debts at a reasonable rate.

Not sure which category seems like the right fit for you? Curious if filing bankruptcy is a good option for you? Contact our office to learn more about Chapter 7 and 13 bankruptcy. CONTACT FORM