Question: Should I File Bankruptcy?
Answer: It depends on your financial situation. Is your pay being garnished? Is your bank account being levied? Are you being sued? Are you being contacted by credit card or collection agencies? Are you behind in your car payments? Are you just making the minimum payments on your credit cards? Are you behind on your house and your home posted for foreclosure?
Question: Should I File 7 or 13?
Answer: It depends on how much you make, the size of your household, and the amount and type of your debts. The Bankruptcy Code uses the Means Test to determine whether your level of income minus the allowable deductions qualifies you to file a Chapter 7. If not, you qualify for a Chapter 13. Yet, a Chapter 13 may be preferable when a vehicle debt can be "crammed down" or mortgage arrearages caught up or non dischargeable IRS debt is owed.
Question: What is Chapter 7?
Answer: Chapter 7 is a liquidation of a person's debts under the U.S. Bankruptcy Code.
It is a petition to the court stating that you are bankrupt (i.e. you cannot pay your bills) and are seeking a Discharge Order from the U.S. Bankruptcy Court, in other words, a fresh start financially. If your debts are large enough whereby the means test shows you cannot pay the debts back and/or you have no current source of income, then you should consider Chapter 7.
Unemployment, illness, divorce, a failed business: all of these can lead a person to consider filing a case. The question is do you need a fresh start?
Question: What is Chapter 13?
Answer: It is a reorganization of a person's debts under the U.S. Bankruptcy Code. If you are facing a pending foreclosure sale, your vehicle has been or is about to be repossessed then it might be time to consider a reorganization.
Question: Do I Qualify for Bankruptcy?
Answer: A review of your debts and income are necessary to determine if you can make payments to your creditors. The Means Test is employed to determine: 1. What type of bankruptcy is applicable, and 2. How much, if any, is required to be paid. After filling out the Debtor's questionnaire in the office, a review is conducted to determine initial qualifications.
Question: How Long Does the Process Take?
Answer: In Chapter 7, it usually takes six months from filing to discharge.
In Chapter 13, it takes three to five years from filing to discharge. (A 13 plan maximum period is limited to 60 months or 5 years). A plan may be less than three (3) years depending on the size of the debt provided that you pay 100% to your unsecured creditors.
Question: How Does Bankruptcy Affect Child Support?
Answer: Child support is a non-dischargeable debt in both Chapter 7 and Chapter 13. If you owe back child support, then you have to pay it back. It can, however, be repaid through a Chapter 13 Plan and many courts will accept this as a valid restructuring of the debt. You must continue making post petition child support payments if repaying back child support though this process.
The art is not in making money,
but in keeping it.