Bankruptcy Basics

The bankruptcy code is divided into four chapters. Chapters 7 and 13 are the form of bankruptcy where most people find relief from their debts. Chapter 12 is constructed for those in the agricultural or fishing industries. Contact us to discuss your situation and possible options.

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Chapter 7

Chapter 7 is also called "straight bankruptcy" or "liquidation bankruptcy." An individual, family or business that is financially struggling, is eligible to file a Chapter 7. Credit cards, medical bills, deficiency balances on repossessed cars are examples of debts discharged in a chapter 7 personal bankruptcy. In some instances back taxes are dischargeable in a Chapter 7 bankruptcy. A Chapter 7 bankruptcy takes about 90 days from start to finish. It is important to remember that some debts are not dischargeable including child support, some taxes, student loans, traffic tickets, restitution and court fines. Contact us to discuss whether Chapter 7 fits your insolvency situation.

Chapter 12

Chapter 12 bankruptcy is intended to address farmers or fishermen who may be claiming bankruptcy. This provides a chance to reorganize debt and keep the family farm or fishing operation going. It does not pertain to debtors with primarily consumer debts. Contact us to discuss whether a Chapter 12 fits your situation.

Chapter 13

Chapter 13 is typically used to reorganize debt during a period of three and five years. During the life of the bankruptcy, a monthly payment is made to the bankruptcy trustee who then distributes the funds to the creditors while protecting the debtor from ongoing creditor collection or property seizure. The Chapter 13 plan payment may be used to catch up on delinquent house or car payments. A Chapter 13 action may be used to reduce the loan amount or interest on a car loan, or stop a tax or child support garnishment. Contact us to discuss whether a Chapter 13 fits your situation.

 

M. Caroline Cantrell, Attorney at Law