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A “chapter” refers to a specific section of the United States Bankruptcy Code. Depending on your situation as an individual filer, or whether or not you are a business entity, we will evaluate the factors that determine which “chapter” of the Bankruptcy code you should file under.

During your free consultation with an attorney at Fitzgerald & Associates, we can advise you as to whether or not bankruptcy is the right option for you.

  • Chapter 13
  • Chapter 7
  • Chapter 11

Chapter 13 Bankruptcy

Chapter 13 is an effective and invaluable option if Chapter 7 does not fit your financial situation.  This type of bankruptcy is a payment plan that gives you the opportunity to pay back your creditors under the protection of the Bankruptcy Code in a regulated way, and is also known as the “wage-earner’s bankruptcy”.

The typical Chapter 13 payment plan lasts three to five years and you will receive a discharge of your unsecured debts at the end of the plan.
Just like a Chapter 7, you will be protected by bankruptcy law from all creditors attempting to collect on the debts that are included in the bankruptcy while you are in a Chapter 13 plan.   You will be paying monthly payments to the Chapter 13 trustee who administers the case, which saves you the trouble of dealing with most creditors yourself.

Chapter 13 is ideal for people who are in the situations listed below:

  • Have a stable income with sufficient funds to make monthly payments in Chapter 13.
  • Are behind on their mortgage since it allows them to catch up on mortgage payments to avoid foreclosure.
  • Are in foreclosure and are trying to save their homes and investment properties.
  • Own properties that are completely underwater with multiple mortgages and equity lines.
  • Have valuable assets such as stocks, savings, and/or equity in their real properties because this plan will allow them to keep their assets.
  • Owe taxes since most tax debts are not dischargeable.

What are the Advantages of Filing a Chapter 13:

  • You can consolidate your debts into one payment.
  • You can keep all your property, as long as you can successfully complete the repayment plan.
  • You can prevent or halt foreclosure or lawsuits that creditors may file against you (Note that debt consolidation agencies do not guarantee this).
  • You can pay back debts that are not discharged in Chapter 7.
  • You can stretch out payments on your overdue alimony and child support.
  • You can strip off secondary mortgages or home equity lines depending on the value of your homes.
  • You can reduce the interest rate or even the principal balance of your car financing in some cases.

If you choose us to represent you in Chapter 13, we will guide you every step of the way and communicate with the trustees, judges, and opposing parties to facilitate your case in your best interest.

 

Chapter 7 Bankruptcy

What is a Chapter 7?

A Chapter 7 bankruptcy is a straight liquidation bankruptcy that is best for an individual that cannot afford to pay their debts. In general, most debts are canceled in a Chapter 7, meaning it can eliminate most types of unsecured debt such as credit cards and medical bills. However, there are some exceptions to this rule such as recent tax debt, student loans, child support or alimony arrears or debt that was procured by fraud.

In addition, criminal charges or sentences are not affected by a bankruptcy filing.  A person filing for bankruptcy is called a debtor, who typically receives a discharge of all unsecured debts usually within four to six months after filing.  In the vast majority of cases, the debtor has no assets that he would lose, so a Chapter 7 filing provides a relatively quick “fresh start”.

Chapter 7 offers a way out for debtors who cannot make ends meet. A qualified debtor will obtain a discharge, which bars creditors from taking any and all action to collect a debt. Chapter 7 petitions are administered by a bankruptcy trustee, who can take possession of a debtor’s non-exempt property, and distribute it among creditors. In most Chapter 7 cases, the automatic stay goes into effect immediately, stopping creditors and debt collectors in their tracks.

If you want to keep your home or vehicle and have payments due on them, you must continue paying on these debts after the bankruptcy is filed. However, before the case is closed, you need to sign and file with the court an agreement to reaffirm or re-assume these debts. This agreement is called a reaffirmation. If no reaffirmation agreement is filed requiring the debtor to keep paying, the debt is canceled and the creditor may not accept payments on the account and may want to repossess or foreclose on the property.

A Chapter 7 is ideal for people who are in situations listed below:

  • Qualify based on the means test . Your income must be below the median income for your state, and this varies by the state you live in and by the number of people in your family.
  • Judgments have been entered against you and you cannot afford to pay.
  • Your wages are being garnished or your accounts have been levied.
  • Based on your income, you cannot afford to pay your debts through a payment plan.
  • You own properties that are completely underwater with multiple mortgages and equity lines.
  • You do not have valuable assets such as stocks, savings, and/or equity.
  • The majority of your debt is not in the form of recent tax debts or student loans because those debts are not dischargeable.
  • You are up-to-date on your mortgage payments and/or have a certain amount of equity in your house.

What are some of the advantages to filing a Chapter 7?

  • You do not have to make any payments towards the debt you owe at the time of filing.
  • All your unsecured debt can be erased, and there’s no limit to how much debt can be discharged.
  • You can prevent or halt foreclosure or lawsuits that creditors may file against you (Note that debt consolidation agencies do not guarantee this).
  • You can keep your house and car as long as you remain current on your payment obligation and the asset fits within the bankruptcy exemptions.
  • Your creditors cannot touch any wages or property that you acquire after the date you file for bankruptcy.

Chapter 11 Bankruptcy

Chapter 11, also called a “business reorganization,” is a type of bankruptcy that affords business owners the opportunity to restructure their organization.  A business owner who files a Chapter 11 is referred to as a debtor-in-possession.  He or she will have the opportunity to file a plan that will be subject to the voting and approval of related creditors.

 

What are some advantages to filing a Chapter 11?

  •  You can acquire financing and loans on favorable terms by giving new lenders first priority of payout on the business’ earnings.
  • The bankruptcy court has the discretion to allow you to reject and cancel contracts and leases
  • You are protected from other litigation against the business through the imposition of an automatic stay provision, which is available for all types of bankruptcies. While the automatic stay is in place, most litigation against the debtor is “stayed”, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue.

The process of Chapter 11 is very complex and time-consuming and one that should be thoroughly discussed with an experienced bankruptcy attorney.