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The most common forms of bankruptcy are Chapter 7 and Chapter 13. Since the major change in the bankruptcy laws which occurred on October 17, 2005, it is imperative that your attorney is able to identify any negative impact that the filing of bankruptcy would have on you and fully understand how these changes affect your eligibility to file for Chapter 7 or Chapter 13 bankruptcy protection.
At the Law Offices of Elliott Abrams, our firm is committed to helping individuals and families get back on their feet through bankruptcy. This is an effective way of regaining control of your finances. Below is some more information on Chapter 7, Chapter 13 and some related issues. Contact attorney Elliott Abrams at our firm today to further discuss your bankruptcy options.
Chapter 7 Bankruptcy
Simply stated, a Chapter 7 bankruptcy filing results in the discharging of most of your debts, including in some cases, income taxes. You generally are able to retain most essential assets including those which have been pledged as security such as your home and your car provided you agree to "reaffirm" the secured debt. This means you will gain a fresh start, as most of your debt is erased. When beginning a Chapter 7 case, a petition is filed with the bankruptcy court with extensive schedules of your assets, your debts, your monthly income and your monthly expenses. You are required to attend a meeting of creditors, known as the 341 meeting. As a condition of receiving the discharge of your debts, you are further required to complete a course in personal financial management. This course as well as the required credit counseling is available on line. In most situations the final discharge is granted within 90 days of the 341 meeting.
The Means Test
The Means Test determines whether you can file for Chapter 7 or must instead file for Chapter 13. It is an analysis of your average income over the prior six months and your "allowable" living expenses to determine whether you have any disposable income from which to pay back all or part of their underlying debt. If enough disposable income exists, you will need to file for Chapter 13 protection instead in order to repay at least some of the debts that are owed.
Chapter 13 Bankruptcy
Where Chapter 7 is a discharge of certain debts and a liquidation of non exempt assets, a Chapter 13 is essentially a court-approved repayment plan. This plan is structured by you and your lawyer, and then presented to the court for approval to begin repaying your creditors on a schedule. The plan typically lasts for five years but in certain circumstances could terminate earlier.
In many cases a Chapter 13 bankruptcy is desirable and more beneficial than Chapter 7 as Chapter 13 allows you to structure the repayment of debts which would not be dischargeable under Chapter 7 such as most taxes. It further allows you to cure arrearages over the length of the Chapter 13 plan owed on secured debts in order to retain assets facing foreclosure or repossession. In some cases under Chapter 13 you are able to bifurcate (divide into two separate portions) secured debts which exceed the value of the secured property into secured and unsecured portions, strip off the unsecured portion and treat it as your other unsecured debts. You are also able to strip off mortgages on your home and treat them as unsecured debts where the mortgage is completely unsecured (i.e. where the amount owing on the senior mortgage(s) exceeds the fair market value of the home).
Foreclosure
Filing for bankruptcy does not automatically mean that you will lose your home. If you are facing a foreclosure, Chapter 13 can help stop the foreclosure proceedings, and provide you the time to organize your finances, so you are able to continue making payments on your mortgage.
For more information on Chapter 7 or Chapter 13, contact our firm today. Attorney Elliott Abrams can help you understand how each of these types of filings may benefit you and help you regain control of your financial situation. There is no charge for your initial meeting. Call the office today at 925-947-1333 to schedule your appointment.
Law Offices of Elliott Abrams
2033 North Main Street, Suite 750
Walnut Creek, CA 94596
925-947-1333
The Law Offices of Elliot Abrams serve clients throughout California and the San Francisco Bay Area including Walnut Creek, Concord, Martinez, Orinda, Berkeley, Piedmont, Pleasanton, Livermore, Danville, Clayton, San Ramon, Alamo, Oakland, Pleasant Hill, Lafayette, Dublin, Benicia, and all cities within Contra Costa County, Alameda County, and Solano County.
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