If your debt is holding you back from moving forward with your life, you need the help of our bankruptcy law firm. We can work with you to create a plan that allows you to satisfy your debts or to get out from under them so you can move forward with your life and begin to make positive financial changes.
What Happens to Debts in Bankruptcy
People tend to assume that bankruptcy will eliminate all of their debts. However, it is important to understand that there is more than one way to file bankruptcy and the type of bankruptcy you file will directly impact what happens to your debt.
If you truly want to eliminate your debts, then you need to file a Chapter 7 bankruptcy. This is known as a liquidation bankruptcy because, during it, you ask the court to eliminate the unsecured debts you owe. In many cases, the court requires the selling of your other assets to satisfy at least a portion of what you owe. However, you and your bankruptcy attorney should review your assets to determine the possible scenarios.
Chapter 13
If you file a Chapter 13 bankruptcy, your debts are not eliminated. Instead, you enter into a reorganization or repayment plan. In this case, you will pay one monthly payment ,which will be distributed among your creditors. This goes on for a period of years, and once that time is complete, any debts that remain are forgiven. A Chapter 13 allows you to keep your assets and it allows your creditors to receive something.
Secured debts are handled differently. You cannot eliminate a secured debt without handing over the collateral that was used to secure it. For example, a Chapter 7 bankruptcy would not eliminate your mortgage loan. In fact, if you want to keep your home or a car with a loan on it, you need to reaffirm that debt through the bankruptcy process. This is essentially saying that you will continue to make the payments as agreed.
There are certain debts that are not dischargeable. This tends to take some clients by surprise. Therefore, it’s important to discuss all your debts with us, as your bankruptcy law firm. Student loans, taxes, and child support are some of the obligations that are not dischargeable through bankruptcy.
Debt Collection During the Process
When you file for bankruptcy, an automatic stay goes into affect. This stay prevents your creditors from trying to collect. This is hugely beneficial if you have been receiving a variety of debt collector calls or are facing potential foreclosures or repossession. It makes it possible for the bankruptcy trustee to make important decisions in regards to what will happen to your debts and which creditors will receive how much money.
Final Ruling
The bankruptcy trustee has the ultimate say in regards to what happens with your debts. As a bankruptcy law firm, our job is to present compelling reasons for your bankruptcy plan or proposals for the courts approval.
Have Your Questions Answered
We are here to answer whatever questions you may have and encourage you to contact our bankruptcy law firm to schedule a consultation.