An Introduction to Bankruptcy and Debt Relief Law
Perhaps you have lost a job, you have recently divorced, or you just can’t manage your debt and the pressure is just too much. For whatever reason, we can discuss your options and explain how you can find protection under the debt relief law.
There are basically two different kinds of debt relief under the federal bankruptcy laws for consumers. The first is called Chapter 7 bankruptcy. It is also commonly known as "straight" bankruptcy. Under Chapter 7 bankruptcy, you can essentially discharge or "walk away" from most, if not all of your unsecured debt. Unsecured debt includes credit card debt, medical bills, repossessions, personal loans, and other debt for which you have not pledged collateral or security.
Secured debt such as a mortgage for a home or a vehicle loan is treated differently. You can walk away from this kind of debt as well, but you must surrender the collateral. Collateral is the thing that you are financing. Alternatively, you can keep the collateral, but you must reaffirm or agree to keep paying for it. Bills for taxes, child support, or student loans represent the third kind of debt, known as priority debt. It is generally not possible to walk away from priority debt.
How will Chapter 7 affect your credit? This is an important consequence which you must evaluate and understand. You should know that for a period of ten years following your filing for relief from debt the fact you filed can appear on your credit record. It will be there for anyone who sees your credit report to consider in deciding whether or not to make you a loan or extend you credit. It could affect you ability to get a new home or new vehicle in the future. It can also affect the interest you pay.
Consequently, bankruptcy should not be taken lightly. This does not necessarily mean you will not be able to get credit. It means, however, that the fact you filed will be a significant factor in future credit decisions.
A second kind of debt relief under the federal bankruptcy laws is known as Chapter 13 bankruptcy. It is also known as "wage earner's" bankruptcy. Chapter 13 bankruptcy is essentially a carefully designed repayment plan for your creditors which you commit yourself to for a minimum three year to maximum of a five year period. Our office prepares this Chapter 13 repayment plan for you in conjunction with a federal bankruptcy code. It generally requires that you pay your creditors all or a percentage of your debt over a period of time depending on the kind of debt you owe and your ability to pay.
Keep in mind under a Chapter 13 plan you agree to place you finances under control of the trustee for three to five years. All of your disposable income is allocated in the repayment plan for your creditors according to certain bankruptcy requirements. This includes anticipated tax refunds and possibly all or part of increased earnings. In exchange for your commitment you receive protection from your creditors and an eventual discharge of the balance of unsecured debt not paid for in the plan over the three to five year period.
If you decide you want to do a Chapter 13 plan you should be reasonably confident that you can maintain stable employment or income. The plan payments will generally come out of your paycheck as a deduction just like taxes or child support and be forwarded to the trustee. The trustee in turn will pay your creditors according to certain bankruptcy rules the trustee must follow.
The role of Garrett Law Offices as your attorney is to discuss with you the chapters of your debt relief protection which are available under the federal bankruptcy laws. You must make the final decision whether to file for protection and if so, whether to file straight bankruptcy under Chapter 7 or whether to make the three to five year commitment to do a Chapter 13 repayment plan. We can help you analyze your financial circumstances as you make your decision. There is no obligation until you decide to retain out office to represent you.
What does it cost to file for debt relief? Good question. There is a filing fee which the bankruptcy court collects and a retainer fee which out office is paid for its efforts. We can explain more how these work and what arrangements can be made for paying the filing fee and retainer if you decide you are interested in pursuing debt relief under the federal bankruptcy laws. We offer competitive pricing and flexible payment plans.
Our objective is to make your case as important to us as it is to you as you go through what could be very difficult times. Hopefully, we can help you find the right protection and debt relief you are after and give you that fresh start honest debtors who encounter problems such as yours are entitled to under the federal debt relief laws. We stand ready to be your attorney and advocate.