Relief from overwhelming debt through the use of the bankruptcy laws has been an important aspect of our country’s history. Many famous and successful Americans have made use of Bankruptcy to gain a fresh start, including Walt Disney, Johnny Unitas, and Henry Ford. It often does not take much for people to find themselves in debt and unable to work their way out of it, despite courageous effort and the best intentions.
Most individuals who seek the fresh start offered by Bankruptcy will file either a Chapter 7 or Chapter 13 Petition. In most cases, filing a Chapter 7 allows you to keep your property and still discharge the consumer debts, such as credit card debt, personal loans, and healthcare charges. Keep your property and get rid of your debt. People usually will file a Chapter 13 case in order to try to catch up on past-due secured loans, typically mortgage or car loan payments. Generally, payments on these arrears will take place over 60 monthly payments paid to a Trustee. The Trustee will then disperse payments to the Creditors. Unsecured creditors, such as credit card companies may also receive some payments depending on an evaluation of the filer’s income, assets and expenses. Some filers are required to file a Chapter 13 rather than a Chapter 7 because they have higher incomes.
In either event, Chapter 7 or 13, the filing stops all collection efforts, from phone calls to garnishments. When we tell our clients that news, we usually get the biggest smile.
There are many more important details that cannot be explained in this brief introduction. We urge everyone who finds themselves at the point where they can reasonably anticipate a difficult time making ends meet to talk to us. Many people contact us well past the point where we can be most effective. They have spent hours on the phone with creditors in a fruitless attempt to work out a payment plan. They have hired companies to try to consolidate debts only to find that they still cannot afford to make these payments or one crucial creditor won’t agree to participate. They have thrown money at bills they can never hope to pay and depleted assets that they could have protected from creditors, such as, most importantly, their retirement assets.
Contact us earlier rather than later. Our initial consultation is free.