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Bankruptcy FAQs

What is Chapter 7 bankruptcy, and why would I choose it?

Chapter 7 bankruptcy is a legal “liquidation” process through which individuals or married couples can discharge their debts. It requires surrendering all nonexempt property to a court supervised trustee to be converted to cash so that the proceeds from that property may be distributed to creditors to satisfy their claims.

People often file Chapter 7 bankruptcy after accumulating a large amount of unsecured debt that they are no longer able to pay. The inability to pay can be from any number of changes in circumstance including job loss, unforeseen medical expenses, divorce, and business failure, to name a few. Chapter 7 bankruptcy provides an opportunity to have debts discharged allowing individuals a “fresh start” free from tremendous financial burdens.

What is Chapter 13 bankruptcy, and why would I choose it?

Chapter 13 bankruptcy provides debtors a three to five year “repayment plan” option. In a Chapter 13 case, the debtor(s) file a plan with the bankruptcy court outlining how they will pay off some of their past-due and current debts by making regular monthly or bi-monthly payments. This option is only available, however, to debtors who have a consistent source of income sufficient to pay both their reasonable monthly expenses and the payments proposed under the repayment plan. At the end of the three to five year repayment period the bankruptcy and all remaining unsecured debt is discharged.

Chapter 13 bankruptcy is typically preferred by debtors who want to keep a valuable asset that is not completely covered by exemptions, and who want to pay off their debts over a period of time. Typical assets might include a home or car. By filing a Chapter 13 bankruptcy, debtors are able to continue to make current payments and catch up past due payments allowing them to maintain possession of the asset.

How often can I file bankruptcy?

Individuals can file for Chapter 7 bankruptcy six (6) years from the date of the last filing.

Individuals can file Chapter 13 bankruptcy at any time; provided, however, they are not currently involved in a Chapter 13 repayment plan.

Will I lose my house if I file bankruptcy?

People can typically keep their home after filing bankruptcy as long as the equity in the property is fully exempt and they continue to make all payments as they become due. If the property is not fully exempt, a Chapter 13 bankruptcy may allow them to keep the property by paying at least the equivalent of the non-exempt equity and any amount they are behind in payments during the term of the repayment plan in addition to continuing to make regular payments timely.

If I’m married, does my spouse also have to file Bankruptcy?

The law does not require that both spouses file for bankruptcy, but it is important that you understand the benefits or consequences of the choice before proceeding. For example, if one spouse has dischargeable debts and the other spouse has debts that are not dischargeable, it might be advantageous for only one spouse to file. Filing together, however, allows you the benefit of doubling your exemptions. There are a number of different issues that should be taken into consideration and an experience bankruptcy attorney can best explain your options.

If you have questions regarding personal bankruptcy, please call the attorneys at Lancer Law at (520) 352-0008 or [email protected]. Mention this web page for a FREE CONSULTATION.

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