Filing for bankruptcy is beneficial for a debtor who is no longer capable of paying debts to his or her lenders. Filing a bankruptcy petition enables one to either pay all debts or have some of them wiped out. Consumer bankruptcy can also help stop foreclosure, wage garnishment, and creditor harassment through an automatic stay. This leads to bankruptcy protection, a fresh start at life, and a chance to secure one’s financial future.

Bankruptcy law is quite complex. As such, it is important to consult with a trusted bankruptcy attorney before proceeding. He or she can help you understand the entire bankruptcy process and specific bankruptcy rules that must be taken into account.

There are different types of bankruptcy. Among the most common are Chapter 7, or liquidation bankruptcy, and Chapter 13, or reorganization bankruptcy. You may decide on what bankruptcy case will suit you by looking into your monthly income, living expenses, and your capability to make monthly payments. The particular petition for bankruptcy that must be filed will also depend on the types of debt that you owe and the creditor you owe from. The part of the bankruptcy proceedings that checks your eligibility is the means test. The bankruptcy means test is used to know whether or not you have the means to repay what is owed and are eligible to file bankruptcy under certain chapters.

What is Bankruptcy Chapter 7?

Reorganization Bankruptcy When filing Chapter 7, you are selling your assets to the bankruptcy trustee. The funds collected from the liquidated assets are distributed to your creditors or debt collectors.

After submitting a Chapter 7 petition in bankruptcy court,  you may be able to wipe out unsecured debts. Credit card bills, medical bills, and personal loans are often discharged. On the other hand, even when you file bankruptcy under this chapter, your secured debt will likely not be considered as dischargeable. Child support, alimony, and student loan debt are also often not part of the bankruptcy discharge.

While all filers are to undergo bankruptcy and credit counseling, formally file a petition to the bankruptcy court, and attend the meeting of creditors, keep in mind that no two Chapter 7 bankruptcy cases are the same. Most would usually take three to six months and there is no minimum amount of debt required.

What is Bankruptcy Filings Under Chapter 13?

If you are considering bankruptcy under Chapter 13, note that you must come up with a repayment plan that must be approved by the bankruptcy court. If you are a wage earner and have enough disposable income to pay off what is owed, you will likely be qualified for this bankruptcy proceeding.

Restructuring or reorganization, which often takes three to five years, is possible in such a declaration of bankruptcy. It is commonly preferred by those who want to stop wage garnishment and foreclosure or repossession of personal property that will likely be listed as nonexempt.

Declaring bankruptcy under Chapter 13 allows you to repay overdue payments and, in some instances, even reinstate your original agreement. If it is shown in the means test that you can pay back your debts through a payment plan, then Chapter 13 may indeed be the best option for you.

Filing Bankruptcy and Bankruptcy Lawyers

If you are struggling with debt and financial problems, seek legal help and assistance from a credible bankruptcy lawyer. Avoid any mistakes related to your would-be bankruptcy filing. Hire the best bankruptcy attorneys to help you with your personal bankruptcy case. Contact our law firm, Phoenix Fresh Start Bankruptcy Attorneys, for a free consultation.