What Bankruptcy Can Do
Eliminate Your Credit Card Debt
As long as your credit card debts are unsecured (meaning that your creditors don’t have any liens on any of your property) bankruptcy is a great way to wipe out credit card debt. If you file for Chapter 13 bankruptcy as opposed to Chapter 7, you may be required to pay back a portion of your unsecured debts. However, any unsecured debts leftover once your repayment plan is complete will be discharged.
Stop Creditor Harassment and Collection
Filing for bankruptcy will put an end to creditor harassment. Many times creditors engage in nasty debt collection tactics to collect their money, but even if they have not crossed the line into actual harassment, filing for bankruptcy will make it unlawful for them to contact. Once you start the bankruptcy process, your creditors are required to deal will your attorney directly.
Eliminate Certain Liens
It is possible with the help of a good bankruptcy attorney to eliminate certain liens that creditors may have on your property. This is where having an experienced bankruptcy attorney on your side is essential. After filing for bankruptcy unless certain procedures are invoked during your bankruptcy case, any liens that you have will remain after your bankruptcy has gone through.
What Only Chapter 13 Bankruptcy Can Do
Allow You to Keep Nonexempt Property
You are not required to give up any property in a Chapter 13 bankruptcy case, because you will be using your income to fund your repayment plan.
Stop a Mortgage Foreclosure
Chapter 13 bankruptcy will stop a foreclosure by forcing the lender to accept a payment plan that allows you to make up your missed payments over time, while making your regular monthly payments. For this plan work, you must be able to demonstrate to the court that you will have enough income in the future to support such a repayment plan.
“Cram Down” Secured Debts
With Chapter 13 bankruptcy it is possible to reduce a secured debt to the replacement value of the property securing it, and then pay off that debt through your payment plan. For example, if you owe $15,000 on a car loan and the car is worth only $8,000, with Chapter 13 bankruptcy you can propose a plan that pays the creditor $8,000 and move to have the remainder of the loan discharged.
Note: This will not apply to a car loan if you purchased the car during the 30-month period before you filed for bankruptcy. For other types of personal property, you cannot “cram down” a secured debt if you purchased the property within one year of filing for bankruptcy.
If you are considering bankruptcy contact McFarlin LLP today for a free consultation. Give us a call at (888) 728-0044 or you can drop us a line here.
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