 INTRODUCTION TO BANKRUPTCY
In ancient times, "debtors were actually sold into slavery or thrown in jail. The debts were paid with slavery services or jail time until the creditors were satisfied." Over time, as society made economic advances, it was agreed that society does not benefit from imprisoning debtors. Laws were developed to regulate debtor-creditor relationships. In the U.S. laws regarding bankruptcy were first passed around 1800. Modern laws are based on major changes that occurred in 1978. Bankruptcy laws have gone through changes since then and the most recent major changes occurred in 2005.
WHAT CHAPTER 7?
Under the federal statute, a discharge is a release of the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay any debts that are discharged. The discharge operates as a permanent order directed to the creditors of the debtor that they refrain from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Although a debtor is relieved of personal liability for all debts that are discharged, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.
WHAT IS CHAPTER 13?
In a chapter 13 case you file a plan showing how you will pay off some of your past-due and current debts over a period of three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property, like your home or car, even if you are behind on payments or you have equity not covered by your exemptions. Your payments on these secured debts will generally be your regular monthly payments plus some extra amount if you need to get caught up because you are behind when you file.
BANKRUPTCY MYTHS
A personal case, whether it is a Chapter 7 or a Chapter 13, can be a powerful tool to help stop collection of your debts, prevent creditor harassment and eliminate up to 100% of your debt. A Chapter 7, if you qualify, is a straight elimination of your general unsecured debt. Chapter 13 is a structured repayment plan of as little as a percentage on the dollar of your general unsecured debt. The rules of the two types of personal cases can be found in the federal bankruptcy code. Although much has been written about bankruptcy law in popular media articles, many myths still persist. When thinking about filing, one should separate myth from fact.
When you are in need of legal advice it is crucial that you know the types of lawyers that will be able to best help you through your situation. Getting the wrong legal advice from lawyers can be extremely detrimental to your case and personal life. You can virtually find hundreds of lawyers that will provide you with the legal advice you need. Knowing which lawyers would be best, can be done by knowing what types of services the lawyers provide in their practice. |
