BANKRUPTCY
Chapter 7
Bankruptcy under Chapter 7 is a complete liquidation of all debts and assets. This means that all of the unsecured debt you have will be discharged once the bankruptcy becomes finale. It also means that all non-exempt property will be seized and sold to pay off the debts. Most people will not have any property seized but will have their unsecured debts discharged. Examples of exempt property includes: your home, your house furniture, two cars, and most other personal belongings. Examples of non-exempt property includes: a second home, RVs, ATVs, motorcycles, etc.
Unsecured debt is debt that is not secured by property. This type of debt is generally credit cards and personal or signature loans. Secured debt is debt that has been secured by a piece of property like your house or your car. Secured debt can be discharged if you voluntarily turn the property in that secures the debt.
There are certain kinds of debts that cannot be discharged including student loans, child support, alimony, federal taxes and various other debts.
In order to file for a Chapter 7 a filer's income must be below certain levels. These levels vary by state and you should consult an attorney prior to filing any type of bankruptcy proceeding.
Chapter 13
A Chapter 13 is a reorganization of debts. This type of Bankruptcy allows one to repay a portion of their debts. A Chapter 13 combines all of your unsecured debts and pays those debts from your income after all of your living expenses are paid. The repayment plan typically takes five years and at the end of the plan the remaining debt is discharged. Like a Chapter 7 a Chapter 13 does not discharge a secured debt unless the secured property has been surrendered.
Please contact my office to discuss these matters in more detail.
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