What Are Your Different Options for Bankruptcy?
Bankruptcy can offer relief to those struggling to manage their finances. Depending on which type of bankruptcy you file, bankruptcy may discharge or reduce certain debts, making managing financial obligations simpler.
In general, bankruptcy filings fall under either Chapter 7 or 13. Both options offer debt management solutions but their processes differ considerably.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also referred to as liquidation bankruptcy, requires you to liquidate certain non-exempt assets and use the proceeds for debt repayment. This chapter may also give you the ability to discharge unsecured debts that are not secured by collateral, meaning you will no longer be held accountable for them.
However, some debts cannot or will not be discharged. Examples include but are not limited to:
- Retirement accounts
- Mortgages, car loans, student loans, and child support (if eligible).
Your monthly income must not exceed the state’s median level in order to be eligible for Chapter 7 bankruptcy protection; to meet this amount your income must not exceed that amount.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy offers you a way to reorganize debts in order to make payments more manageable. Instead of having your assets sold or the debt discharged immediately, creditors work together to craft a repayment plan that can help pay off all or part of your outstanding obligations.
The repayment plan typically lasts three to five years. If you meet your obligations, some or all of your debt may be forgiven.
In order to be eligible for Chapter 13 bankruptcy, you must have regular income and a minimum amount of secured and unsecured debts.
Our Pensacola bankruptcy lawyers can guide you through each option. We’ll assess your eligibility so you make an informed decision for your case.
What Happens After Filing for Bankruptcy?
Filing for bankruptcy is a legal process that can help individuals or businesses eliminate or restructure their debts. However, it is not a decision to be taken lightly as it has significant consequences. After filing for bankruptcy, the debtor will experience a series of events that will impact their financial and legal status.
The first step after filing for bankruptcy is to attend a meeting with the bankruptcy trustee. This meeting, also known as the 341 meeting, is mandatory and requires the debtor to answer questions under oath about their financial affairs. The trustee will review the debtor’s bankruptcy petition and schedules, including their assets, liabilities, income, and expenses. This meeting is an opportunity for creditors to attend and ask questions, although they are not required to do so.
Depending on the type of bankruptcy filed, the debtor may have to complete additional requirements such as attending credit counseling or submitting a repayment plan. In a Chapter 7 bankruptcy, the debtor’s non-exempt assets may be sold to repay creditors. In a Chapter 13 bankruptcy, the debtor is allowed to keep their assets but must repay a portion of their debts over a period of three to five years.
After the bankruptcy case is completed, the debtor will receive a discharge order, which eliminates their personal liability for most debts. However, certain debts, such as student loans, taxes, and child support, cannot be discharged in bankruptcy. It is important to note that the discharge does not remove liens from secured debts, and the creditor may still repossess the collateral if the debtor fails to make payments.
Contact Our Pensacola Bankruptcy Attorneys Today
You cannot manage the bankruptcy process on your own. You will need a team of bankruptcy professionals in Pensacola to help you manage all the paperwork. A team of professionals can also assist you in finding an attorney to help you navigate complex bankruptcy law. You can explore all options for debt relief, and you will have access to an expert negotiator who can help you negotiate with your bankruptcy trustee. Together, we will create a plan to restore your credit and help you live debt-free.
If you are in need of legal services, we encourage you to contact Bruner Wright. With years of experience and a commitment to achieving the best results for their clients, the team at Bruner Wright is ready to assist you. Don’t hesitate to reach out and schedule a consultation today to see how they can help you with your legal needs.
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Contact Bruner Wright P.A. today if you are interested in working with the best Pensacola bankruptcy attorney for your case.