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CHAPTER 13 BANKRUPTCY

BANKRUPTCY OVERVIEW

A Chapter 13 Bankruptcy is a reorganization of your debt. Some call it a bill consolidation through the court system. Unlike a Chapter 7, which simply liquidates your unsecured debt and has no payments, a Chapter 13 Bankruptcy is a powerful tool to pay creditors on terms that are favorable to you. This chapter of bankruptcy allows you to keep property that has delinquent payments. A person normally utilizes a Chapter 13 Bankruptcy in the following situations:

    1. First, a Chapter 13 Bankruptcy can allow a Debtor to stop the foreclosure of a residence or repossession of a vehicle. The Chapter 13 repayment plan allows the Debtor to take any mortgage arrears and pay back the mortgage company over a three to five year period. It also allows you to completely refinance automobile loans and generally lower interest rates. This provides you an opportunity to impose payment terms favorable to you, rather than unrealistic terms imposed by a creditor. 


    2. Furthermore, debts that may not be dischargeable in a Chapter 7 can be paid back through a Chapter 13 Bankruptcy. Examples of non-dischargeable debts are delinquent income taxes and back due child support. The Chapter 13 Bankruptcy allows the Debtor to repay these debts over the three to five year payment plan and in most situations prohibits wage garnishment.

  • Chapter 7 Bankruptcy Costs in Time and Money
    The whole Chapter 7 bankruptcy process takes approximately four months, costs $335 in court filing fees, and requires only one Zoom video meeting with your bankruptcy trustee. You must also complete credit counseling with an agency approved by the United States Trustee. We will give you this credit counseling information when you talk with us.
  • Who Can File for Chapter 7 Bankruptcy?
    You won't be able to use Chapter 7 bankruptcy if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan. Our attorneys can explain more about the Chapter 7 eligibility requirements.
  • Bankruptcy's Magic Wand -- The Automatic Stay
    Filing for Chapter 7 bankruptcy puts into effect something called the "automatic stay." The automatic stay immediately stops creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally grab ("garnish") your wages, empty your bank account, go after your car, house, or other property.
  • Bankruptcy Court's Control Over Your Financial Affairs
    By filing for Chapter 7 bankruptcy, you are technically placing the property you own and the debts you owe in the hands of the bankruptcy court. You can't sell or give away any of the property you own when you file, or pay off your pre-filing debts, without the court's consent. However, with a few exceptions, you can do what you wish with property you acquire and income you earn after you file for bankruptcy.
  • The Bankruptcy Trustee for Chapter 7 Bankruptcy
    The court exercises its control through a court-appointed person called a "bankruptcy trustee." The trustee's primary duty is to see that your creditors are paid as much as possible of what you owe them. And the more assets the trustee recovers for creditors, the more the trustee is paid. The trustee (or the trustee's staff) will examine your papers to make sure they are complete and to look for nonexempt property to sell for the benefit of creditors. The trustee will also look at your financial transactions during the previous year to see if any can be undone to free up assets to distribute to your creditors. In most Chapter 7 bankruptcy cases, the trustee finds nothing of value to sell.
  • The Creditors Meeting
    A week or two after you file, you (and all the creditors you list in your bankruptcy papers) will receive a notice that a "creditors meeting" has been scheduled. The bankruptcy trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and the papers you filed. In the vast majority of Chapter 7 bankruptcies, this is all done by Zoom video so you do not have to go anywhere in person. Also, usually no creditors show up to this meeting.
  • What Happens to Your Property
    If, after the creditors meeting, the trustee determines that you have some nonexempt property, you may be required to either surrender that property or provide the trustee with its equivalent value in cash. If the property isn't worth very much or would be cumbersome for the trustee to sell, the trustee may "abandon" the property -- which means that you get to keep it, even though it is nonexempt. However, which property is exempt varies by state. Our attorneys can tell you which assets are exempt and which assets are not in Mississippi. Most property owned by Chapter 7 debtors is either exempt or is essentially worthless for purposes of raising money for the creditors. As a result, few debtors end up having to surrender any property, unless it is collateral for a secured debt. To get a better understanding of what may happen to your property in bankruptcy, give us a call.
  • How Your Secured Debts Are Treated
    If you've pledged property as collateral for a loan, the loan is called a secured debt. The most common examples of collateral are houses and automobiles. If you're behind on your payments, the creditor can ask to have the automatic stay lifted in order to repossess or foreclose on the property. However, if you are current on your payments, you can keep the property and keep making payments as before. If a creditor has recorded a lien against your property because of a debt you haven't paid (for example, because the creditor obtained a court judgment against you), that debt is also secured. You may be able to wipe out the lien in Chapter 7 bankruptcy. Get in-depth information on how your secured debts are handled with one of our experienced attorneys.
  • The Chapter 7 Bankruptcy Discharge
    At the end of the bankruptcy process, all of your debts are wiped out (discharged) by the court, except: debts that automatically survive bankruptcy, such as child support, most tax debts, student loans, and criminal fines, and debts that the court has declared nondischargeable because the creditor objected (for example, debts incurred by your fraud or malicious acts).

if you qualify for bankruptcy.

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