Understanding the Basic Differences Between
Chapter 7 and Chapter 13 filings
Chapter 7 and Chapter 13 filings
Financial problems are not uncommon in our area, especially considering Michigan qualifies as one of the "hardest hit" States in America. The reasons that people file bankruptcy can stem from any variety of reasons, from loss of a job to unexpected medical expenses. Bankruptcy laws were created to help provide you with a way to stop the harassment and collection actions of creditors, protect your assets, and thereby allow you to get a fresh start.
Chapter 7 bankruptcy helps people eliminate or cancel most debts. Some debts are not dischargeable (student loans, certain tax debts, alimony/child support, etc). Additionally, there are some debts you may want to keep paying in order to keep the asset that is attached to the debt (for example, a vehicle or mortgage debt might be kept so that you can keep the vehicle and/or house attached to the debt). Most Chapter 7 cases allow debtors to eliminate debt and keep all of their household goods and personal property; however, in rare circumstances, you may have to surrender certain assets if you are unable to exempt them. Our job is to protect ALL of your assets, or to advise you concerning your other alternatives if we cannot protect them to assure you know all of your options prior to filing a case. The free consultation that we offer will assure that you are given all these options and given the advice you need in order to determine which Chapter is right for you.
Clients who are behind on a car or mortgage and face repossession or foreclosure often end up filing a Chapter 13 Bankruptcy. This is a reorganization style bankruptcy that requires clients have a regular source of income. Chapter 13 assures that clients can keep ALL of their assets while restructuring and repaying some or all of their debt back. Remember it is still a bankruptcy, so debt can be (and most times is) eliminated during this chapter as well, allowing you to catch up and focus on the assets you need to keep paying for in order to protect them from your creditors. Both Chapters upon filing will force creditors to stop harassing phone calls, letters, garnishments and lawsuits, but Chapter 13 can also stop foreclosures and repossessions, force the return of some assets that may have already been seized before filing the case, and still eliminate negative equity, high interest and general unsecured debts (like credit cards, judgments, garnishments, collections, and medical bills).
There were some major changes made to the Federal Bankruptcy code that took effect in October, 2005. The changes made to the bankruptcy laws set certain restrictions for filing based upon income and expenses, as well as making changes concerning domestic support and debt liquidation. In addition, the law now requires that all debtors obtain credit counseling prior to filing any Bankruptcy and a second credit education course prior to getting discharged from any Bankruptcy. Lastly, changes were made on the process involved for repeat filers. Now more than ever it is important to use an experienced bankruptcy attorney for your filing.
The difference between a law firm that handles occasional bankruptcy cases and a firm like ours that does only bankruptcy law is the same as comparing a friend that throws the football around in their backyard to someone who plays professional football. Our firm handles only bankruptcy cases and has done so for over a decade. We have filed hundreds upon hundreds of bankruptcy cases and reviewed thousands of bankruptcy claims. Thanks to our experienced staff, we are able to sit down with prospective clients and quickly assess what type of bankruptcy filing, if any, is in their best interest. Don't take our word for it, set up a free consultation and make your own judgment about whether our firm is the right choice for handling all of your financial problems. Call us today for your FREE consultation at (810) 239-4050 or email us directly at [email protected].