For individuals and couples thinking about bankruptcy, the first step toward making an informed decision is to gain a basic understanding of the procedures, limitations and benefits involved. The more you know about what you can expect during and after your bankruptcy, the more confident you can feel in your decision to file under Chapter 7 or Chapter 13, or to pursue another alternative.
1. The Bankruptcy Process
First and foremost, bankruptcy is a process. Despite what some of the “self-help” websites want you to believe, discharging your debts in bankruptcy isn’t something that happens overnight. You don’t simply file a few forms and then wait for a letter from the court to come in the mail. You need to plan ahead, and you need to be actively involved throughout the entire process in order to maximize the benefits of your filing.
2. Chapter 7 vs. Chapter 13
For most individuals and couples, the two primary options when it comes to filing for bankruptcy are filing under Chapter 7 and Chapter 13. A Chapter 7 bankruptcy is known as a “liquidation” bankruptcy, or a “fresh start”. In a Chapter 13 bankruptcy (also known as a “wage earner’s plan”), you restructure your debts over a three or five-year period so that you can satisfy your outstanding obligations. At the end of the process, certain of your remaining debts will be eligible for discharge.
3. Eligibility Criteria
Not everyone is eligible to file for bankruptcy. Both Chapter 7 and Chapter 13 have eligibility criteria and, since Chapter 7 provides for discharge without a
repayment plan, the criteria to file under Chapter 7 are stricter than those for filing under Chapter 13. Learn more:
• Chapter 7 Bankruptcy
• Chapter 13 Bankruptcy
4. Dischargeable vs. Non-Dischargeable Debts
In bankruptcy, some debts are eligible to be discharged and some aren’t. When a debt is discharged, you are no longer liable to make payments.
Debts that are eligible for discharge include:
• Credit card bills
• Medical bills
• Utility bills
• Dishonored checks
• Past-due rent
• Civil court judgments
• Amounts turned over to collection agencies
Non-dischargeable debts include alimony, child support, student loans and certain taxes.
Discuss Your Options With Bankruptcy Attorney Rebecca M. Moughon
The Law Office of Rebecca Moughon is a bankruptcy law firm in The Woodlands, TX that represents individuals and couples in Chapter 7 and Chapter 13 bankruptcies. If you would like personalized legal advice about filing for bankruptcy, we encourage you to call (832) 653-9371 or contact us online for a free consultation.