There are two basic types of Consumer Bankruptcy proceedings, Chapter
7 and 13. A filing under Chapter 7 is called liquidation or sometimes a straight
bankruptcy. It is the most common type of bankruptcy proceeding. Chapter 7
involves the appointment of a trustee who administers the Bankruptcy
proceedings. The Trustee reviews all papers filed and determines if there are
assets available for liquidation for the benefit of the creditors. In most
Chapter 7s all property of the person filing bankruptcy (the "debtor") is
exempt and therefore is retained by the debtor. Any debt on a house or a
vehicle that the debtor retains must be reaffirmed and paid in accordance with
the original contract. Most of the remaining debt of the debtor with some
exceptions is discharged in a completed Chapter 7.
Chapter 13 on the other hand involves the rehabilitation of the debtor to
allow him or her to use future earnings to pay off creditors. A Chapter 13 is
commonly used to save a home from foreclosure by filing a Chapter 13 plan
which requires the mortgage company to accept the delinquent sum in
payments over 3 to 5 years. This requires adequate cash flow from income to
pay not only the house payment but also the amount of arrearage owed to the
mortgage company. The typical debtor in this situation has lost his or her job
and could not make the house payment and fell behind. But now the debtor
has regained employment and can make the payment, however, he or she just
can not pay the huge sum the mortgage company demands now. Chapter 13
can cure this problem.
The Bankruptcy Prevention and Consumer Protection Act that came into
law in October, 2005 has resulted in major reforms in bankruptcy law. Under
this new law a debtor must qualify to be allowed to file Chapter 7. The
qualification is derived from income level, household size and certain allowed
expenses. It has been demonstrated that most people will qualify to file under
Chapter 7. If Chapter 7 if not available you can file Chapter 13 which allows
you to pay a manageable monthly payment to satisfy creditors. The creditors
most likely will not get paid everything they are owed but they will be paid
some amount and at the end of the Chapter 13 payment plan you will be
discharged from all your debt. The Act also requires that a debtor complete a
credit counselling session prior to filing bankruptcy.
The above are just basics. We can discuss your individual situation. Just
give us a call. The first conference for consumer bankruptcy is free.
7 and 13. A filing under Chapter 7 is called liquidation or sometimes a straight
bankruptcy. It is the most common type of bankruptcy proceeding. Chapter 7
involves the appointment of a trustee who administers the Bankruptcy
proceedings. The Trustee reviews all papers filed and determines if there are
assets available for liquidation for the benefit of the creditors. In most
Chapter 7s all property of the person filing bankruptcy (the "debtor") is
exempt and therefore is retained by the debtor. Any debt on a house or a
vehicle that the debtor retains must be reaffirmed and paid in accordance with
the original contract. Most of the remaining debt of the debtor with some
exceptions is discharged in a completed Chapter 7.
Chapter 13 on the other hand involves the rehabilitation of the debtor to
allow him or her to use future earnings to pay off creditors. A Chapter 13 is
commonly used to save a home from foreclosure by filing a Chapter 13 plan
which requires the mortgage company to accept the delinquent sum in
payments over 3 to 5 years. This requires adequate cash flow from income to
pay not only the house payment but also the amount of arrearage owed to the
mortgage company. The typical debtor in this situation has lost his or her job
and could not make the house payment and fell behind. But now the debtor
has regained employment and can make the payment, however, he or she just
can not pay the huge sum the mortgage company demands now. Chapter 13
can cure this problem.
The Bankruptcy Prevention and Consumer Protection Act that came into
law in October, 2005 has resulted in major reforms in bankruptcy law. Under
this new law a debtor must qualify to be allowed to file Chapter 7. The
qualification is derived from income level, household size and certain allowed
expenses. It has been demonstrated that most people will qualify to file under
Chapter 7. If Chapter 7 if not available you can file Chapter 13 which allows
you to pay a manageable monthly payment to satisfy creditors. The creditors
most likely will not get paid everything they are owed but they will be paid
some amount and at the end of the Chapter 13 payment plan you will be
discharged from all your debt. The Act also requires that a debtor complete a
credit counselling session prior to filing bankruptcy.
The above are just basics. We can discuss your individual situation. Just
give us a call. The first conference for consumer bankruptcy is free.
 | Bankruptcy law |
| Chapter 7 |
| Chapter 13 | |
LAW OFFICE OF WILLIAM W. BIVIN
Bankruptcy Basics
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LAW OFFICE OF
WILLIAM W.BIVIN
WILLIAM W.BIVIN