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Chapter 7

Chapter 13

Chapter 13


Chapter 7  can often be a straightforward process, which is available for individuals and businesses. Most cases are completed in about 3-4 months.  For an individual to  file under this chapter, they first have to pass what is called the "means test." This means that your household income must be under the current median income as determined by the census bureau. The means test calculation can have a lot of ambiguities depending on how complicated (or not) a person's income is. It is best to speak to an attorney about this, rather than to assume you are over or under  the median, based simply on  raw numbers. Chapter 7  requires the liquidation of  assets, however, most people who file do not have any assets above and beyond the allowed  exemptions. If a business files under Chapter 7, any assets of the business will be liquidated and any monies generated will be used to pay the creditors. 

Chapter 7 can eliminate (discharge) many debts, including credit cards, medical bills, and in some cases, income tax debts. It is important to note that there are specific requirements that must be met to eliminate tax debts. 

Chapter 7 can also discharge deficiencies after foreclosure on a home or after repossession of a vehicle.

Filing Chapter 7 can give you the opportunity to wipe the slate clean and obtain a fresh start. Call us today for a free consultation.

Chapter 13

Chapter 13

Chapter 13


Most people who are considering a bankruptcy filing only have Chapter 7 in mind, because the thought of repaying some of the debt over time seems counterintuitive, given the financial stress they are under. However, Chapter 13 has a lot of features that are unavailable in Chapter 7. Understanding them is key and depending on the circumstances of your case, a Chapter 13 may be the better option. First, if you are behind in your mortgage and a  foreclosure is imminent, a Chapter 13 filing will "stay" (stop) that proceeding immediately. A chapter 13 plan would be proposed to cure the mortgage arrears and get the payments back on track over either 36 or 60 months, depending on your income level. 

Another key feature of a Chapter 13 is that in some instances, a junior lien can be stripped (removed) and treated as an unsecured creditor. It is important to note, that you must complete the chapter 13 plan otherwise, that junior lien will be resurrected (if you do not finish the plan.) 

Chapter 13 bankruptcy is also an option for debtors who are ineligible to file a Chapter 7 based on the “means test.” Filing for bankruptcy under Chapter 13 may allow you to get back on track by reorganizing your debts into one affordable monthly payment- with zero interest.

Chapter 13 does NOT require you to pay all of your  unsecured debts (usually credit cards) in full. You pay what you can afford based upon your disposable income, Most Chapter 13 clients pay a small percentage back to their unsecured creditors; some pay nothing at all.