In these economic conditions, the word “Bankruptcy” has experienced an “extreme makeover.” For millions of people this year and 2009, bankruptcy has become a saving grace, enabling people to realize a fresh financial start in life. Bankruptcy filings have been on a steady increase. More than 1.4 million people filed Chapter 7 and 13 Bankruptcy in 2009, which is 300,000 people more than 2008 (1.1 million filings), and 600,000 more people than 2007 (880,000 filings). With unemployment in America slightly below 10 percent, and many people with mortgages on their homes that exceed the value of the home, millions of Americans are facing the prospect of being saddled with debt and no hope in sight. For those people experiencing financial problems, Bankruptcy may be a solution.
For starters, there are generally two types of Bankruptcy that consumers can file, Chapter 7 and Chapter 13, and understanding the distinctions is very important.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is designed to provide relief by discharging mostly all debt, secured and unsecured Some examples of unsecured debts Chapter 7 may eliminate are credit cards; deficiencies on repossessed vehicles; medical bills; and most loans. In addition to getting rid of your debt, Chapter 7 allows the filer to keep his property, through reaffirmation, as long as the payments are current, and there is no significant equity in the property. The one caveat about Chapter 7, is that there are income limitations to how much a person can make who wishes to file Chapter 7. In general, most Chapter 7 cases take between 60 to 90 days to close from the date of filing.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is more or less a way of reorganizing debt by reducing unsecured debt and allowing the individual to keep his/her property and entering into a payment plan to relieve the debt. In Chapter 13 bankruptcy, the person consolidates his debts and makes a payment on the debt over a 36 month to 60 month period. Contrary to Chapter 7 Bankruptcy, in order to file Chapter 13, the person must be working or have a consistent source of income to be approved. Debts that are generally consolidated in a Chapter 13 bankruptcy are mortgage arrears, balances on vehicle loans, student loans, credit card debts and other unsecured debts.
Atty Bryan Wallace is a founding member of the National Law Group (NLG) – the first and only Black-owned coalition of law firms that offers legal services to customers nationwide. To be legally represented for Bankrupcty and other matters such as Family Law, Personal Injury, and Medical Malpractice, call (866) 654-2727 or visit www.NLGattorneys.com or www.BlackLawyers.NET
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