Chapter 7 & Chapter 13 Bankruptcy
I never thought I would have to file for bankruptcy
Filing a bankruptcy today does not carry the social embarrassment that it did in the past.
This is due in part to the U.S financial disaster that began in 2008. The mortgage/housing crisis, loss of jobs, and escalating medical costs caused many hard working people to file bankruptcies and take control of their financial futures. Ben Bernanke, the former head of the Federal Reserve, said the 2008 financial crisis was the worst in global history, surpassing even the Great Depression.
It’s important to weigh the pros and cons of filing a bankruptcy case. In the end, many people decide that the benefits far outweigh the emotional or social stigma. In thinking about your options, you should consider that the bankruptcy system was put in place by Congress as a chance to get a fresh start toward a brighter financial future.
Should I file for bankruptcy?
This depends on some factors. If you are behind on a few payments you may not need a bankruptcy. Depending on your circumstances there may also be alternative actions you can take to repay debt without bankruptcy. Bankruptcy protection is a tool of last resort, designed to give you a fresh start by wiping away most of your eligible debt.
Are there different types of bankruptcies?
Yes, Chapter 7 and Chapter 13, and there are standard debt and income/asset limits to qualify for either plan.
If eligible, most people choose a Chapter 7 bankruptcy because this plan does not require them to pay back any portion of their debt. When you file a Chapter 7 bankruptcy an “automatic stay” takes effect. This action is temporary but immediately stops most creditors from attempting to collect your debt using collection methods like wage garnishment, taking money from your bank accounts or cutting off utilities.
Do I need an attorney for bankruptcy?
Legally, you are permitted to file a bankruptcy without an attorney (known as pro se). However, the Federal Bankruptcy Courts do not make this an easy process!
There is much more that goes into a bankruptcy than filing a few online forms. Bankruptcy laws are federally based, but there are many specific local rules for each district that only an experienced bankruptcy attorney will understand. If you choose to file a bankruptcy without an attorney, you will be responsible for navigating this complex system on your own. The bankruptcy clerk’s office and your Bankruptcy Trustee cannot offer any legal advice and will not “help you” in filing your own case.
Can they take my house in a bankruptcy?
There are exemptions for both Chapter 7 and Chapter 13 bankruptcy that can help you keep the home you live in and protect any home equity. Called Homestead Exemptions, most people qualify for these exemptions provided that the property is their primary residence.
Can Bankruptcy Help Me if I’m Behind on My Car Payments?
If you are behind on your car payments due to financial difficulties, all is not lost. You may be able remedy this and save your vehicle from repossession with a Chapter 7 or Chapter 13 bankruptcy plan.