It can be very difficult to decide if filing for bankruptcy would be the right option. The constant letters, phone calls and threats from bill collectors seem like a never-ending problem. The bankruptcy laws are complex; before determining the right way to proceed, it’s wise to have a consultation with an experienced bankruptcy attorney in Baltimore.
Chapter 7 – Liquidation
Chapter 7 is the most common form of bankruptcy. It is a liquidation bankruptcy which will wipe out unsecured debts, often medical bills or credit card balances. When there is no way to pay the accumulated bills, Chapter 7 can be the only way to get out from under crushing debt.
Life will immediately improve as soon as the bankruptcy is filed with the court. An automatic stay will halt all collection attempts from creditors. They will not be able to garnish wages, cut off utilities or empty your bank account.
A trustee is appointed by the court to review the bankruptcy documents. As a liquidation bankruptcy, Chapter 7 allows the trustee to sell the debtor’s non-exempt property and divide the proceeds among the creditors. If all of the property is exempt, the debtor does not lose any property and the creditors receive nothing.
Some debts, such as alimony, child support and student loans, will not be discharged in a Chapter 7 bankruptcy. However, it will be easier to pay these debts after the bankruptcy. The process usually takes four to six months.
Chapter 13 – Reorganization
Chapter 13 is a reorganization bankruptcy that is often used by someone facing foreclosure on their home. Chapter 13 allows people to pay off debts over three to five years, including missed payments on the mortgage or a car loan. It may be possible for an unsecured junior lien on a home to be stripped during a Chapter 13 bankruptcy.
A portion of the debts is repaid during the bankruptcy; when the bankruptcy is concluded, many debts will be discharged. In order to qualify, it’s necessary to have a stable income, sufficient to meet the reduced monthly debt payment during the bankruptcy period.
If you’re considering bankruptcy, request a free consultation from the Law Offices of Frank E. Turney. Filing for Chapter 7 or Chapter 13 may be the right solution to get your life back on track. This knowledgeable bankruptcy attorney in Baltimore has been fighting to protect the legal rights of clients since 1993.
