Law Office of James B. Cronon, LLC
Having financial difficulties? Phone calls day and night? Facing foreclosure? Garnishments?
Bankruptcy under Chapter 7 of the US Code allows debtors relief from creditors through liquidation of assets. You must identify all of your debts and all of your assets to the Bankruptcy Court. You are allowed a certain amount of exemptions for your assets, which identify them as items that the Bankruptcy Court cannot seize - in the majority of cases, this usually constitutes everything you own. Anything beyond the exemptions may be surrendered to a Trustee of the Bankruptcy Court, who will liquidate the assets, and pay creditors from the proceeds.
After filing, most have all of their debts discharged (meaning you no longer have to pay them) after 6 months or so.
COMMON MYTH: "I won't be able to keep my house or my car if I file for Chapter 7!"
FALSE! Provided that you are current on your payments, and can demonstrate to the court that you have enough income to cover the cost, you will be allowed to reaffirm those debts, and continue to keep paying monthly.
Bankruptcy relief under Chapter 7 or Chapter 13 may be right for you!
Bankruptcy under Chapter 13 of the US Code is also known as reorganization of debts.
You must identify all of your debts and all of your assets to the Bankruptcy Court. You also will provide proof of your disposible income: the amount of your check that is left after paying rent, utilities, food, etc. Your bankruptcy attorney will assist you in finding this amount.
You are allowed a certain amount of exemptions for your assets, which identify them as items that the Bankruptcy Court cannot seize - in the majority of cases, this usually constitutes everything you own.
Together, your attorney and you put together a plan through which you may pay your disposable income into the Bankruptcy Court for a set period - usually between 3 and 5 years.
Through this plan, you must pay:
- All past-due payments, or arrearage, on secured debts (houses, cars, motorcycles, etc.);
- The monthly payment for each secured debt; and
- Some percentage of your unsecured debt (e.g., credit cards, personal loans, etc.) The balance on these unsecured debts that is unpaid at the end of the term can be discharged - meaning you no longer owe it.
Certain debts are not dischargeable:
- Most Federal, State, and Local Taxes
- Debts for personal injury or death caused by DUI of drugs or alcohol
- Criminal fines or penalties
- Debts not claimed in your petition
If filing Chapter 7, you will be responsible for paying them after your case is discharged.
If filing Chapter 13, you must pay these debts through the plan, or the balance will remain at the end of the plan.