Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is the proceeding that most people understand when hearing the word “bankruptcy.” The filing date of the petition for bankruptcy protection is a “snapshot” date for purposes of valuing the debtor’s property, secured debts on a house or car, and all of the various unsecured debts. The filing date also generally results in an “automatic stay” of creditor actions, which can operate to halt the garnishment of the debtor’s paycheck and accounts. All of the debtor’s property becomes part of the bankruptcy estate, and a trustee is assigned by the court to determine whether objections should be made and whether nonexempt property exists which should be collected and distributed for the benefit of the creditors. At the end of the proceeding, the normal result is that the debtor keeps their exempt property (e.g. the residence, one car or two cars for a married couple, household goods, and retirement accounts), and the normal debts from credit cards, hospitals, and other unsecured debts or loans are discharged. Debts receiving special treatment, like taxes and student loans, generally are not discharged. Palmateer personally sees his clients through the entire bankruptcy, from the initial consultation and exemption planning, preparing the dozens of pages of forms and filing, working with the trustee to resolve questions efficiently, and attending the meeting of creditors. Nobody wants to have to file a Chapter 7 bankruptcy, but this process can provide a fresh start for a debtor who otherwise may be unable to ever get in front of high interest or high balance debts, and a good attorney can help to streamline the process and avoid financial and family disruption. Additional information on Chapter 7 bankruptcies can be found at the following link: https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is more complicated and costly than a Chapter 7 bankruptcy. However, in some cases it can provide additional protections for a debtor, for example if the debtor has valuable nonexempt property that the debtor wishes to keep after the bankruptcy, or if a foreclosure needs to be halted. Further, some debtors simply make too much money to file a successful Chapter 7 bankruptcy. The debtor in a Chapter 13 bankruptcy proposes a plan for repaying some or all of their debts, and payments are made on a monthly basis over either three years or five years. The trustee and creditors may object to portions of the plan, and once the issues are resolve the plan goes before the Court for confirmation. Starting the month after the filing date and continuing through confirmation until the plan is complete, payments are made by the debtors, either directly to the trustee or through automatic deductions from a paycheck by the employer. At the conclusion of a successful plan, remaining qualifying debts are generally discharged. https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics.