Many people who should file bankruptcy may never do so because instead of finding out the truth of how bankruptcy can help them, they fall prey to the common myths concerning bankruptcy. If you’re considering filing, make sure you know what bankruptcy can and cannot do for your financial well-being. Once you understand that, you can make an informed decision about whether to file.
What does chapter 7 bankruptcy do?
Chapter 7 bankruptcy rids you of debts by liquidating non-exempt assets and properties in order to pay your creditors.
Non-exempt assets and properties may include:
- bank accounts;
- certain collectibles;
- expensive musical instruments unless a professional musician;
- second home; and/or
- a second car.
However, you may not even have to sell certain assets or property. A lawyer can advise you based on your individual case.
Filing chapter 7 bankruptcy allows you to:
- clear credit debt;
- clear medical debt;
- clear utility bill debt;
- avoid certain liens; and
- be free of certain creditors harassing you with phone calls or other forms of contact by issuing an automatic stay.
All of this can bring peace of mind to you and your family and could help you prepare a more sound financial future.
What does Chapter 13 bankruptcy do?
Chapter 13 bankruptcy allows you to pay off your creditors by arranging a payment plan based on your wages. The plan is also based on your other expenses.
Filing chapter 13 bankruptcy allows you to:
- avoid foreclosure and keep your home;
- avoid repossessions;
- pay off non-dischargeable taxes;
- lower some loan rates; and
- avoid direct contact with creditors through one payment plan for all of them.
A Chapter 13 bankruptcy may also help you plan for your financial future while still keeping your home and car.
What Filing for Bankruptcy Does Not Do
Filing chapter 7 or chapter 13 does not relieve all debts. Debts not relieved by filing bankruptcy include certain kinds of taxes and student loans, except in rare cases where the court decides the student loan proves too much of a burden. Other debts may not be discharged either, so talk to an attorney about whether filing can discharge a particular debt.
It’s also important to note that filing for Chapter 7 bankruptcy cannot stop a foreclosure. It may delay it but the creditor may motion to lift the automatic stay so it can proceed with a foreclosure. Still, this can buy time to catch up on payments or make other living arrangements. A Chapter 13 bankruptcy, though, can avoid foreclosure by arranging a payment plan.
Get Help from Warren & Migliaccio
If you live in Plano and are wondering if you should file for bankruptcy, let Warren & Migliaccio, L.L.P. assess how bankruptcy can benefit you and your family during a free consultation. Warren and Migliaccio are even able to represent their clients in federal bankruptcy court. Call our office today at 888-584-9614 or contact us online to set up a consultation.