As trusted legal advisors at James H. Wilson Law Firm, we understand that facing bankruptcy can be a stressful experience. To better assist you in navigating such challenging waters, we’ve compiled answers to some of the most frequently asked questions regarding bankruptcy.
Bankruptcy is a legal proceeding in federal court that allows individuals and businesses to either eliminate their debts (discharge) or create a plan to repay them. This process is overseen by the bankruptcy court and primarily comes in two forms: liquidation and reorganization.
With Chapter 7 liquidation, you’re requesting the court to discharge your debts, while a Chapter 13 reorganization involves a court-approved repayment plan based on your income and debt level.
Upon filing for bankruptcy, an ‘automatic stay’ is initiated. This court order prohibits most creditors from taking action to collect debts from you during the bankruptcy process, unless the court allows them to resume through lifting the stay.
Chapter 7 bankruptcy is geared towards discharging most of your debts. It may require the sale of non-exempt property to pay creditors. On the other hand, Chapter 13 bankruptcy allows you to retain your property while repaying debts through a structured plan. Your repayment is influenced by your income, the amount and types of debts owed, and the property you own.
While you may prefer one over the other, your financial situation dictates your eligibility for Chapter 7 or Chapter 13 bankruptcy. Factors such as secured and unsecured debt limits, as well as your income level and disposable income, can affect which bankruptcy chapter you are qualified to file.
The choice between Chapter 7 and Chapter 13 bankruptcy is significant and depends on multiple individual factors, such as eligibility, personal financial goals, and specific circumstances regarding assets, like home ownership. Chapter 7 can be chosen for a clean slate if you qualify, while Chapter 13 is often selected to manage debt repayment without losing valuable assets.
Not all debts are dischargeable through bankruptcy. Obligations like child support, alimony, certain taxes, and generally student loans will remain owed. Other debts may be deemed non-dischargeable if the creditor successfully argues that they should survive the bankruptcy.
Your assets’ fate in bankruptcy varies greatly between Chapter 7 and Chapter 13. In Chapter 7, you might have to part with non-exempt property, while in Chapter 13, you retain your assets by repaying debts through your income. Exemptions, both federal and state, play a crucial role in determining the assets you’re able to keep.
For additional questions or to consult with one of our experienced bankruptcy attorneys at James H. Wilson Law Firm, please reach us at 804.740.6464. Our team is dedicated to providing you with clear guidance and support throughout your bankruptcy proceedings.