Debt Relief Through Bankruptcy
If your financial situation has reached the point where you will not be able to make negotiated payments in a debt settlement or debt management plan, you should confer with a bankruptcy attorney.
The most commonly filed type of consumer bankruptcy is Chapter 7. It is a comprehensive tool for dealing with all of your debt and it can usually be completed in three to five months. While your case is pending, creditors are prohibited from pursuing collection efforts against you. If you successfully complete a Chapter 7 case, the majority (if not all) of your debt will be discharged or eliminated.
Filing a Chapter 7 does not come without its disadvantages, however. You must pass the means test to qualify for this type of filing, and you should know that:
- You cannot discharge most student loan debt, taxes, or child support obligations
- Your credit score will be damaged and the bankruptcy notation will remain on your credit report for up to 10 years
- If you have a co-signor on any of your loans, your discharge of the loan will leave the co-signor as solely liable to repay the debt.
- You cannot file another Chapter 7 case for eight years
- If you have non-exempt assets, the trustee could seize them to liquidate and pay your creditors
- If you are “judgment proof” (creditor cannot collect anything from you), filing a bankruptcy may not be necessary.
Consumers who do not qualify for Chapter 7 can seek debt relief under Chapter 13. In a Chapter 13 case, the debtor must submit a repayment plan setting forth how your creditors will be paid. The plan is based on your income and debts. It lasts for a term of three to five years and if you successfully complete it, your unsecured debts will be discharged. Most unsecured creditors are paid a very small percentage of what is owed to them under a Chapter 13 plan. A Chapter 13 filing remains on your credit report for up to seven years.
If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get out of debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!
Posted in: Bankruptcy