The Law Offices of David L Smith, experienced in Chapter 7, Chapter 13 and Chapter 11 bankruptcy. We will help you make a well informed decision about your financial future.
Chapter 7 Bankruptcy:
What is Chapter 7 Bankruptcy?
Chapter 7 is the most common when filing for bankruptcy. It is commonly known as "straight bankruptcy" or "liquidation." Chapter 7 is usually filed by individuals or husband and wife.
How will this help me?
Filing for Chapter 7 will give you many benefits including a clean start on a new financial future. You will be able to keep all of your exempt assets. Most often an exempt asset includes, pension, 401K and IRA (Individual Retirement Accounts), personal property, vehicles and in some cases your equity on your house. Exempt assets vary from state to state and your attorney will inform you of your states laws.
How do I qualify?
To qualify for Chapter 7 you must make less than the median income for your hometown (the "means test"). If your income, at the time of filing your Petition for Bankruptcy protection, is higher than the median income, you will have to pay a proportionate amount of the debt to the creditor. Since every city is unique, the Law Offices of David L Smith will be able to tell you if you meet this requirement. If you don't meet this requirement there are other options which we will help you with.
What are the downsides?
Filing for bankruptcy does affect your credit score. In many cases, most people would choose a fresh start and work on building their credit score rather than continue to lower it. Another downside is not all debt is able to be discharged. In many cases, student loans, child support payments and taxes will not be discharged. Again, every state is different and your attorney will be able to help you with your states specific laws.
Chapter 13 Bankruptcy:
What is Chapter 13 Bankruptcy?
Filing for Chapter 13 is less common, yet, it may be right for you. It is often referred to as the "wage-earners bankruptcy." Your attorney will help your decided if this is right for you. This is a particular effective remedy when you are upside down on your home.
How will this help me?
You will be able to pay for your living expenses while paying back your unsecured debt. A calculation of your expenses will be completed and all your debt will be combined into one payment. This will be completed with the help of your attorney. In 5 years or less your debt will be paid off while still maintaining your monthly bills.
How do I qualify?
Chapter 13 is for "high" income earners with "less" debt. There are specific guidelines for qualifying for Chapter 13. Your attorney will help you determine if you qualify. Additionally, you will be required to gather documents for the court to prove your cost of living. Your attorney will help you with the specific documents you will need.
What, if any, are the downsides?
When filing for Chapter 13, you will be required to pay back more of your debt. In contrast, when you file for Chapter 7, you wouldn't be required to pay back as much of your unsecured debt. In addition, filing for Chapter 13 doesn't discharge any government payments, such as taxes. However, it does freeze interest and the government cannot add penalties to your account since you filed for Chapter 13. Filing for Chapter 13 will also affect your credit score negatively.
Chapter 11 Bankruptcy:
What is Chapter 11 Bankruptcy?
Chapter 11 is generally for business or partnerships. Individuals and married couples who have more than one million in debt can also file for Chapter 11 but there are additional requirements they must meet. Chapter 11 tends to be the choice for large corporations, yet there are special laws written for individuals and small business.
How will this help me?
Unlike Chapter 13, filing for Chapter 11 has no limits on the amount of debt you or the business owes to creditors. Chapter 11 allows the most flexibility when filing for bankruptcy. While this allows the most flexibility, it also is the most complicated and has the most stipulations.
How do I qualify?
The first step to filing for Chapter 11 is filing a petition; this can be voluntary or involuntary. Your attorney will help you make this decision. Following the petition the court will require a disclosure statement and reorganization of your business. This is a crucial step to the process and your attorney will work closely with you during this step.
What are the downsides?
If you own a business or partnership the court will now oversee your business since you filed for Chapter 11. In addition, your creditors will benefit from the profits of your business since you owe them a debt.
|
