Chapter 7 Bankruptcy
Bankruptcy can give you a fresh start to take control of your financial life if you consult an expert bankruptcy lawyer in Cleveland. However, remember, filing for bankruptcy does not guarantee discharge of all your debts. The type of bankruptcy (Chapter 7 or Chapter 13) you choose determines what debts are discharged and how. Speak to your Cleveland bankruptcy attorney to determine the best course of action depending on your unique situation.
Chapter 7 bankruptcy is by far the most popular, as it discharges most of your debts without you having to pay anything. It is also termed as liquidation because the trustee will sell off all your non-exempt assets and distribute the amount so received among the creditors as per the Bankruptcy Code.
Your credit card debts and other unsecured bills such as medical bills, payday loans, personal loans, car repossessions, overdue rents, etc can be completely discharged by Chapter 7 bankruptcy. However, there are some debts such as alimony, child support, debts incurred by fraud, student loans, fines and penalties owed to the government or courts, debts caused due to negligent driving causing injury to others, and certain taxes that cannot be discharged using Chapter 7 bankruptcy. Your Cleveland bankruptcy law firm can guide you about the debts that you can or cannot discharge using Chapter 7 bankruptcy.
It may be possible that you wish to keep your house but have been behind payments. In such a case, your Cleveland bankruptcy attorney may advise Chapter 13 bankruptcy as being more favorable for your situation and help you work out a repayment plan to repay the debt over a period of time. This is especially useful if your property is non-exempt.
However, the provision of ‘reaffirmation agreement’ in Chapter 7 bankruptcy allows you to keep your house or furniture if you choose to reaffirm these debts. A debt is considered reaffirmed only when you are current on payments. So, if you were falling behind the payments, you will first need to pay the outstanding dues. Selective reaffirmation is possible, and you can choose the assets that you wish to reaffirm and those that you can let go to the respective creditor. Seek expert advice from an accomplished bankruptcy lawyer in Cleveland when considering this option. This is because when you choose reaffirmation, your debts will continue to remain for another eight years and you will be required to keep paying them off just like before filing for bankruptcy.
There are a few key advantages of filing chapter 7 bankruptcy, which include complete discharge of non-secured debts, protection from creditors trying to recover dues, ability to keep your income and property acquired after filing for bankruptcy, and complete discharge in three to six months. But, on the flip side, your non-exempt assets are sold off, you cannot keep your car or property if it’s not exempted, you get only a temporary reprieve from an impending foreclosure, you can file for chapter 7 bankruptcy again only after eight years of discharge of the first one, and the cosigners (if any) are held responsible for discharge of your loan unless they also file for bankruptcy. Your Cleveland bankruptcy law firm can help you weigh the pros and cons before filing for bankruptcy.
Your bankruptcy lawyer in Cleveland may suggest Chapter 13 in such a scenario, as it gives you an option to keep both exempt and non-exempt assets by working out a repayment plan. In addition, you will learn that debts such as those incurred due to fraud that cannot be discharged in Chapter 7, can be discharged in Chapter 13 bankruptcy. Also, since you rework a payment plan to pay off your debts, co-signers stand protected. Chapter 13 bankruptcy protects you from foreclosure on your home and provides you with more time to pay non-dischargeable debts like alimony, child support, taxes, etc. You also get the flexibility to priorities your debts by classifying various creditors.
However, unlike Chapter 7 where you get to keep all your income and property acquired after filing for bankruptcy, in Chapter 13, you will spend the income after filing bankruptcy in paying off the debts. Also, the time taken to discharge Chapter 13 bankruptcy is much longer (three to five years) when compared to Chapter 7 bankruptcy.
It is recommended that you discuss your financial situation in detail with Rubinstein Law Firm, an expert Cleveland bankruptcy law firm to make a fresh start to a happy financial life.