Being in debt or facing foreclosure is challenging and frustrating. The bankruptcy process helps individuals and families faced with mounting debt, foreclosure, wage or bank garnishment, repossession and other financial difficulties. When someone files for bankruptcy protection, an automatic stay arises, that generally prevents creditors from pursuing foreclosures, repossessions, lawsuits and other types of collection activity unless the bankruptcy court permits it.
There are two common types of bankruptcy filings made by individuals and couples – Chapter 7 liquidation and Chapter 13 reorganization. An experienced bankruptcy attorney can help you determine which type of filing is best for you.
Chapter 7 bankruptcies are the simplest. They are a valuable tool in certain circumstances. In a Chapter 7 bankruptcy, the debtor surrenders all their non-exempt property to the bankruptcy trustee to be “liquidated” (sold or otherwise converted into money to be paid to creditors) in exchange for a discharge of most types of debts. Some Chapter 7 cases are “no asset” cases in which no property is available for liquidation by the trustee. A knowledgeable bankruptcy attorney helps you determine what property may be exempt from liquidation and advise you whether a Chapter 7 bankruptcy may suit your needs. Individuals with higher incomes or with property they need to protect from creditors may not be well served by a Chapter 7 filing.
In that situation, Chapter 13 bankruptcies are most common for individuals and couples with regular employment, facing foreclosure, repossession and other collection attempts. In a Chapter 13 bankruptcy, the debtor proposes a plan to make monthly payments to the bankruptcy trustee. The trustee distributes funds to the creditors instead of the debtor paying each creditor individually. Your bankruptcy attorney can ensure that the payments are manageable, and can also help you identify what property you may want to turn over and what property you may want to keep. After completing the plan payments, the debtor generally is discharged from most remaining debts. Chapter 13 bankruptcies are a powerful and flexible tool to reorganize the debtor’s finances, but the debtor must be able to make the required monthly payments in order to obtain the full benefit of the bankruptcy filing and discharge.
A less common form of personal bankruptcy is a Chapter 11 filing. Chapter 11 bankruptcies are more routinely used by businesses to reorganize their debts. Chapter 11 cases are similar to Chapter 13 cases, but there are more complex requirements for obtaining court approval of a plan of reorganization (essentially a repayment plan) and for other aspects of the case. Chapter 11 cases may be well-suited for individuals whose income or assets are too high for a Chapter 13 filing. A bankruptcy attorney can help you make that evaluation.
Bankruptcy may seem intimidating, but it can put a fast stop to dunning calls from creditors, collections, foreclosures, lawsuits and repossession attempts. Bankruptcy gives debtors “breathing room” while they address and attempt to resolve their financial difficulties in an orderly manner and under court supervision. Silverman Thompson’s bankruptcy attorneys are happy to talk to you about your finances, needs and goals, and can assist you to choose the best path toward a better financial future.
In addition to assisting individuals and couples with personal bankruptcies, Silverman Thompson attorneys routinely advise businesses, creditors and others in large and complex business bankruptcy matters. For more information on Silverman Thompson’s creditors’ rights and consumer bankruptcy practice, please click here.