Bankruptcy, as far as the US Bankruptcy Code is concerned, is the process undergone when an individual or business seeks relief from their debts. The proceedings involved in invoking bankruptcy are supervised by and litigated in the United States Bankruptcy Courts. The Bankruptcy Code provides that creditors must stop all collection efforts against the debtor, and allows the debtor to preserve his assets and settle his debts in a feasible manner. There are two main types of Bankruptcy, Chapter 7 & Chapter 13.
Chapter 7
Chapter 7 bankruptcy will eliminate most kinds of unsecured debt. Some examples of unsecured debts are credit cards; medical bills; most personal loans; judgments resulting from car accidents; and deficiencies on repossessed vehicles.
In addition to getting rid of your debt, you typically can keep all of your property. As long as your car and mortgage payments are current, and there is no significant equity in your property, we should have no problem making the arrangements for you to reaffirm the debt. Keep your home, keep your car, keep your personal belongings, but eliminate your debt; that is our goal. The Law Office of James K. Tamke may be able to use Chapter 7 to provide you with many benefits.
Chapter 13
Chapter 13 bankruptcy is a debt repayment plan through which you consolidate your debts and make a payment on your debt over a 3 to 5 year period. While in a Chapter 13 debt repayment plan, the creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.
One very important thing to remember about Chapter 13 bankruptcy is that you need to be working or have a consistent source of income for your repayment plan to be approved by the court. After you pay your monthly living expenses, you need to be able to make a payment to the court to consolidate your debts.
Debts that are generally consolidated in a Chapter 13 bankruptcy are mortgage arrears, balances on vehicle loans, student loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 consolidation.