Bankruptcy is a powerful, legal tool that provides financial relief to individuals, and families enabling them to eliminate or reorganize debt for a healthier financial future.
At Law and Mediation Office of Destinee Tartuffe, Destinee will take the time to fully understand your financial situation before recommending a course of action. She will lay out all available options and help you determine if bankruptcy is the most advantageous option for your current financial situation. Destinee will assist with the below sections of the Bankruptcy Code. Some people will qualify for multiple Chapters, and some may only qualify for one, but it is rare to not qualify at all. Income level and amount of debt are factors used in determining which bankruptcy chapter an individual or family may qualify for.
Sometimes no matter what you do there simply doesn’t seem to be any reasonable solution that will save your financial situation from too much debt sometimes your only choice left is to declare bankruptcy. If you are in a financial situation where bankruptcy is your only option, you will want to make sure you choose the best bankruptcy chapter to file your proceedings under that will set you up for a better financial future moving forward. The best way to make such a decision is to ensure that you are adequately informed, and educated at every stage of your process.
Bankruptcy doesn’t mean the end of your financial future. If a filer follows the proper procedures brighter days can be on the horizon.
Bankruptcy
There are two kinds of bankruptcy filings an individual or family can choose from. One is the Chapter 7 bankruptcy process. This type of filing is where the Debtor asks the court to completely discharge their debts, using any existing assets they have to pay out. The Chapter 13 bankruptcy filing process allows a Debtor to propose a payment plan that will be approved by the court. Chapter 13 payment plans allow a Debtor to pay establish a plan to repay at least a portion of what they originally owed over the next 3 to 5 years.
In either case, a bankruptcy flag is applied to your credit report and can stay on your credit history for up to 10 years. Even after 10 years, bankruptcy may be revealed when you seek employment at a new job, or apply for a personal loan or life insurance policy. Whether it is a Chapter 7 and Chapter 13 filing, the stigma of bankruptcy may be with you for the rest of your life.
There are other differences between the two filing options besides partial repayment or a complete discharge of your debts. For example: Filing under Chapter 7 bankruptcy does not protect a Debtor from losing their home to foreclosure, whereas filing under Chapter 13 may allow a Debtor to avoid foreclosure. Under a Chapter 13 bankruptcy filing because there is a partial repayment of your debts, a trustee will be assigned to the matter. The trustee manages payments and they divide the money accordingly amongst your creditors. In both cases, creditors must stop any action to collect on your debts and cannot pursue any further litigation against you.
Chapter 7 Filing Versus Chapter 13 Filing
Bankruptcy FAQs
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People of all ages, income levels, vocations and educational backgrounds may file for personal bankruptcy. Some frequently cited reasons for seeking bankruptcy relief include:
Medical expenses
Mortgages that have become unaffordable
Divorce or separation
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A bankruptcy may appear on a filer’s credit report for up to 10 years, however, in many cases filing for bankruptcy can actually help to improve a person’s credit score. A large portion of a credit score is attributed to a person’s debt-to-credit ratio (the amount of money owed to creditors compared to the total amount of allowable credit). Filing for bankruptcy can often improve the debt-to-credit ratio, which will in turn may increase the credit score.
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In many cases, bankruptcy can offer protection from having to leave a residence or at least can provide more time to find a new place to live. When a bankruptcy petition is filed, the court will issue an order for an “automatic stay”. The automatic stay immediately stops any and all further collection actions from being taken against the filer, including home foreclosure, while the bankruptcy process is underway. Depending on the filer’s individual situation, Chapter 13 bankruptcy may offer the opportunity to work with the lender to lower the monthly mortgage payment and also establish a repayment plan to catch-up on any past-due amounts which may allow a filer to keep their home. Typically, a filer under Chapter 7 will not be able to retain their home.
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The cost of filing for bankruptcy varies based on the complexity of the case, but the overall cost consists of fixed administrative and court filing fees in addition to a fee to hire and retain a bankruptcy attorney. It is not advisable to try to file for bankruptcy without an attorney, as this can lead to costly mistakes or even an outright dismissal of the case and accusations of fraud. Be very wary of any attorney who posts a flat fee on his or her website or quotes a fee over the phone without taking the time to set up a personal meeting and fully understand the details of the case. Reputable bankruptcy attorneys have several strategies for working with clients who are struggling financially, from payment plans to using funds previously allocated for monthly expenses.
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Lenders have the right to repossess, or take back, an automobile that has been financed (through an auto loan or lease) if payments are not made. However, an experienced bankruptcy attorney may be able to prevent the surrender of a car. It may be possible to reaffirm an auto loan debt (which means the individual retains the car and continues to make payments as promised) or pay off the remaining balance of the loan or lease and redeem the car (which means the individual would then own the car outright). It is important to speak with a knowledgeable attorney about your matter.
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Filing a Chapter 7 case under the Bankruptcy Code provides relief for individuals with an income below the state median (of the state where they reside), enabling them to eliminate debts and stop collections efforts. Filing for Chapter 7 bankruptcy can help a filer:
Safeguard their assets
Discharge most debts
Rebuild their credit score
End collections actions
Stop wage garnishment