Most preconceptions about bankruptcy are about Chapter 7 bankruptcy, which generally involves the discharge of credit card debt, medical bills, and most other unsecured debt. For secured debts such as houses and cars the payments must be current or else the debtor risks losing that property. The typical debtor is able to keep a house and car provided the equity does not exceed their applicable exemptions. A typical Chapter 7 bankruptcy lasts 4-6 months from start to finish, leaving the Debtor free from most debt obligations including credit card debt, medical debt, repossession debt, unpaid utility bills, old tax debt, unsecured loans, and even judgments. Many clients regret having waited so long to file since the attorney fees and court costs associated with bankruptcy are often much less than continued monthly payments on debts that never seem to decrease due to payments going most to interest.
Chapter 13 bankruptcy or the"wage earner" plan involves the repayment of a portion of your debt over 3-5 years. The amount of the monthly payments is based upon your ability to pay in addition to the amount of secured debts payments for items a debtor intends to keep such as a house and car. Chapter 13 is utilized most often to save a house from foreclosure or when the debtor makes too much money to qualify for Chapter 7 bankruptcy. That being said there are other reasons to file Chapter 13 versus Chapter 7, and speaking with an attorney is the best way to find out if either is right for you.
**11 U.S.C. 528(a)(4) NOTICE. We are a debt relief agency. We help people file for bankruptcy relief under the federal Bankruptcy Code.**