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Bankruptcy
Bankruptcy: A new beginning
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Over 40 years of combined experience in filing thousands of bankruptcies. Attorneys Danny Smith and Francois Choudoir are actively involved in each and every bankruptcy filing our firm performs.
Bankruptcy is a legal proceeding in Federal Bankruptcy Court in which you seek a "discharge" of debt when you cannot pay your bills.
Bankruptcy laws were passed in order to give debt-burdened consumers an organized, systematic way of paying back creditors and getting a financial fresh start. Let the experienced attorneys at Smith & Choudoir Law PLLC advise you on both bankruptcy and non-bankruptcy options. Let us get you started on your fresh start.
As soon as you file bankruptcy, an automatic stay typically stops your creditors from attempting to collect your debts. This includes any act by a creditor to repossess, garnish, or foreclose upon your property. There are two main types of bankruptcy for individuals and business owners: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
In Chapter 7, liquidation bankruptcy, the bankruptcy court forgives most debts that are not secured by assets or property, such as your house or car. In addition, you are allowed to retain certain "exempt assets”. The allowable exemptions are very generous, and in most cases, you will get to keep all of your property.
However, under Chapter 7, a court-appointed trustee may take possession of your nonexempt property, arrange for its sale or liquidation, and is responsible for paying as many of your debts as possible with the proceeds.
(Not all debts can be erased by bankruptcy.)
Chapter 13 Bankruptcy
Chapter 13, reorganization bankruptcy, may be your only choice if you have the income to repay your debts after all of your reasonable and necessary living expenses are paid. Filing for Chapter 13 bankruptcy allows you to pay your debts in installments, many times interest-free, usually over a three to five year period.
If you are behind on your mortgage and your home has not sold at a foreclosure sale, Chapter 13 can save your home and allow you to catch up on your mortgage payments. In some circumstances, Chapter 13 also allows you to strip or remove your second mortgage, provided your house is worth less than you owe on the first mortgage. Many people who want to keep their property, such as a house or car, turn to Chapter 13.
When debt gets overwhelming, the worst thing you can do is nothing.
When to Consider Bankruptcy?
You should consider bankruptcy when you cannot pay your bills, your mortgage payment is behind, or when a particular crisis such as job loss, illness, or accident makes the future payments of your bills unlikely. Begin thinking about bankruptcy before your house sells at auction or before you receive a summons and complaint. If you received a judgment against you, bankruptcy may be used to stop the creditor from garnishing your wages and bank accounts, or seizing or placing liens on your property.
Time Matters
Don't wait until your paycheck is garnished by a creditor or your house sells at foreclosure. Get in touch with us today!
If you are in financial crisis, you have options. Through bankruptcy, you may be able to cancel debts, protect your home from foreclosure, stop collection calls, and get a fresh financial start.
What Can I Keep?
In most cases, everything! With either Chapter 7 or Chapter 13, the law allows you to keep certain in exempt property, such as:
- Homestead - Property you own and occupy up to $75,000
- Insurance - Homeowners insurance proceeds up to $75,000, disability benefits, life insurance proceeds (if clause prohibits proceeds from being used to pay beneficiary's creditors)
- Pensions - Tax-exempt retirement accounts including 401(k)s, 403(b)s, SEP, and SIMPLE IRAs
- Personal Property - Mobile homes up to $30,000, tangible personal property up to $10,000 in individual bankruptcy or up to $20,000 in joint bankruptcy
- Public Benefits - Federal income tax refunds up to $5,000, state income tax refunds up to $5,000, social security, unemployment, worker's compensation, assistance to disabled
*This is not a comprehensive list. Other items may also be exempt.
Does Bankruptcy Wipe Out All Debts?
In Chapter 7 bankruptcy, you can wipe out all debts except:
- Child support, alimony, fines, property settlements, criminal restitution, some taxes
- Debts not listed in your bankruptcy
- Loans or debts incurred by fraud
- Debts resulting from willful and malicious harm
- Student loans
- Debts for death or personal injury caused while driving intoxicated
- Debts incurred to pay taxes
Some of these debts can be wiped out in a Chapter 13 bankruptcy.
Secured Creditors
Some of your creditors may have a security interest in your home or personal property, like your car. This means that you gave the creditor a mortgage on your home or put your property up as collateral for the debt.
If you don't make your payments on the debt, the creditor may be able to take and sell the home, car, or other secured property. In many cases, you can keep the property. In most cases, you MUST continue making payments if you want to keep it, and some creditors require you to sign a reaffirmation agreement which will exclude the debt from being discharged in bankruptcy.
Filing for Bankruptcy can be a Difficult Decision
Each situation is unique, personal, and can seem overwhelming. If you are struggling with debt, through bankruptcy you may be able to cancel debts, protect your home from foreclosure, remove the second mortgage from your home, and stop collection calls.
Let the experienced attorneys at Smith & Choudoir Law PLLC advise you on both bankruptcy and non- bankruptcy options. Let us get you started on your fresh start.
** The content of this page is not intended to be a source of legal advice. You should not rely on the intonation provided herein as legal advice for any purpose. You should consult an attorney for individual advice concerning your own situation. FREE BACKGROUND INFORMATION AVAILABLE UPON REQUEST.
We are a debt relief agency. We assist individuals and businesses to seek relief under the U.S. Bankruptcy Code.