Introduction to Bankruptcy

In a Chapter 7 bankruptcy, also known as liquidation,"unsecured" debts such as credit cards, medical bills, personal signature loans and all other loans and debts that are not secured by collateral (property) are usually discharged (wiped out) in a Chapter 7 bankruptcy, and your creditors will be prohibited from attempting to collect from you.

Certain debts are not dischargeable, including certain taxes, alimony, child support, criminal debts, student loans, and a few others. We can help you determine whether or not a debt will be eligible for discharge.

What is a Chapter 13 Bankruptcy?

Chapter 13 is also known as a wage-earner or consolidation bankruptcy, because your debts are reorganized into a payment plan over 3 to 5 years. At the completion of the Chapter 13 plan, your unsecured debts are discharged, much like in the Chapter 7.

People who have problems with secured debt are often better off filing a Chapter 13 case than a Chapter 7 case because the Chapter 13 allows the debtor to pay off any past-due secured debt over time. Chapter 13 can stop the foreclosure of your home or repossession of your car and lets you catch up on the past-due payments over a period of years, instead of all at once. When your Chapter 13 case is filed, you will resume making your future mortgage payments directly to the mortgage company, but your past-due mortgage payments, your car, and other debts will be paid through your Chapter 13 case.

In Chapter 13, the automatic stay also protects "co-debtors." Co-debtors are people who are responsible to pay the same debt as the debtor. That includes people who have guaranteed or co-signed the debt for the debtor.

Certain debts that would not be dischargeable in a Chapter 7 might be handled in a Chapter 13. We will advise you on whether Chapter 13 would be appropriate for you, depending on your income, assets, and type of debts.