Common Bankruptcy Questions
What is Chapter 7 Bankruptcy?
Chapter 7 is a provision of the U.S. bankruptcy code that permits individuals to liquidate assets and discharge debt. Therefore, this form of debt relief is directed towards the most common consumer debts, including: credit card debt, medical bills, judgments and unsecured personal loans. Furthermore, a Chapter 7 Bankruptcy is primarily utilized to eliminate unsecured debt while allowing you to continue paying for your house or car. Lastly, Chapter 7 prohibits your creditors from contacting you about debt and stops all collection activities such as garnishments, repossessions or foreclosures. However, not everyone automatically qualifies for Chapter 7 protection. Contact us if you have more bankruptcy questions about Chapter 7.
What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is also called a wage earner’s plan. Therefore, Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debts. Furthermore, under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. However, if the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. Lastly, in no case may a plan provide for payments over a period longer than five years.
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps, most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. Therefore, by filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the Chapter 13 plan on time. Another advantage of Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the Chapter 13 plan. Contact us if you have more bankruptcy questions about Chapter 13.
Common Bankruptcy Questions & Answers:
Q: Must I sell my home if I file for Bankruptcy?
Q: Can I keep my vehicle if I file for Bankruptcy?
Q: Does my spouse have to file for Bankruptcy with me?
Q: Do I have to close all my credit accounts if I file for Bankruptcy?
What Property Can You keep in Chapter 7 Bankruptcy Relief?
Under Georgia law, some property and income is exempt from being liquidated in Chapter 7 bankruptcy proceedings. Those exceptions include:
- The homestead, up to $21,500 in value
- Income from child support or alimony
- Workers’ compensation
- Veterans’ benefits
- IRAs and ERISA-qualified benefits
- Insurance proceeds
- Motor vehicles, up to $3,500 in value
- Unemployment compensation, Social Security benefits or public assistance
- Aid to disabled persons
- Tools necessary for a particular trade
- Up to $600 of property chosen by the individual
The homestead exception can be critical to someone facing the prospect of foreclosure and eviction. Also, there are other exemptions under Chapter 7, but you should know that filing for bankruptcy has a long-term effect on your credit rating for up to ten years. However, if you’d like more information on whether filing for bankruptcy is right for you, contact us today.
Under Alabama law, some property and income is exempt from being liquidated in Chapter 7 bankruptcy proceedings. Those exceptions include:
- Homestead: Up to $15,000 in value and up to 160 acres of real estate and the residence upon it, including a house, mobile home or similar dwelling place. Ala. Code 6-10-2
- Personal Property: Burial plot or church pew for use by you or your family. Ala. Code 6-10-5. Clothing, family portraits, pictures and books for use by you or your family. Ala. Code 6-10-6. Life insurance proceeds. Ala. Code 6-10-8
- Retirement accounts and benefits: IRAs, Roth IRAs and retirement accounts qualified under the Internal Revenue Code. Ala. Code 19-3B-508 State Employees’ Retirement Systems accounts and benefits. Ala. Code 36-27-28 Teachers’ Retirement System accounts and benefits. Ala. Code 16-25-23
Don’t risk attempting to file your petition alone in an attempt to save money. You face a high risk of having your petition rejected if you are unsure how to navigate the Bankruptcy Code. If you have bankruptcy questions, we offer free consultations for both Ch. 7 & Ch. 13 Bankruptcies.
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