Bankruptcy Laws - How to File Chapters 7 & 13
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Bankruptcy: How to File Chapter 7 & 13

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If you're thinking about filing for bankruptcy, you're not alone. Millions of Americans struggle with debt from credit cards, medical bills and mortgage payments. Filing bankruptcy could allow you to get a fresh financial start.

Bankruptcy is a legal process designed to put a stop to collection calls and wipe out debt for good. What can bankruptcy do for you?

The two main types of consumer bankruptcy, Chapter 7 and 13, offer different paths to debt relief, but both are designed to erase debt and stop debt collectors.

Find out more by talking to a bankruptcy lawyer today.

Learn what real attorneys have to say about bankruptcy in our Q&A session:

We interview bankruptcy attorneys John Carlin and Robert Bruner about how bankruptcy may provide the debt relief and fresh start so many people need.

What Are Your Options? Talk to a Bankruptcy Attorney Today

Talking to a local attorney can help you find answers to your questions about bankruptcy. Get the facts about bankruptcy, how you might qualify, and what happens after you file.

If you're struggling with debt and considering your options, get help to today. Learn your legal rights during a free consultation with a local bankruptcy attorney. Get started right now.

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Bankruptcy in 2014 - Are there New Laws for Filers?

While bankruptcy laws are known to change periodically, there have been no new laws passed that affect bankruptcy filings. Filing bankruptcy in 2014 will likely be unchanged from recent years. The last major bankruptcy law reform was enacted in 2005.

Some smaller changes to the bankruptcy process, such as the median income to qualify for Chapter 7 are changed periodically based on census data.

If you've been considering bankruptcy as a debt-relief tool, filing in 2014 shouldn't provide any new challenges from previous years, but it may be in your best interest to discuss your case with a bankruptcy attorney before filing.

Your Bankruptcy Options: Chapter 7 vs. Chapter 13

There are two main forms of bankruptcy protection for individuals. Each works to resolve debt in its own ways:

  • Chapter 7 is designed to eliminate unsecured debts, such as credit cards, medical bills, store cards, utility bills, payday loans and other debt not tied to property.
  • Chapter 13 is designed to stop foreclosure (save your home) and reorganize debts into an affordable monthly repayment plan.

Each type of bankruptcy involves a different process and may produce different results, based on your unique financial situation.

Filing Under Chapter 7 of the U.S. Bankruptcy Code

Also called "straight" bankruptcy because of the quick relief it offers, this form of bankruptcy is frequently known as "Chapter 7" for the section of the bankruptcy code that outlines how it works.

If you want to eliminate unsecured debt like credit cards, payday loans, utility bills, medical debt and some personal loans, filing bankruptcy under a Chapter 7 may be an option.

Chapter 7 bankruptcy is usually a viable option for people with lots of unsecured debt and little income, such as an unemployed person who's been using credit cards or payday loans to make ends meet.

If you want to file Chapter 7, you'll have to take the Chapter 7 means test to see if you qualify. But don't worry, most people who want to file Chapter 7 are able to. It's a myth that the "new" bankruptcy law made it so no one can file for bankruptcy.

The means test determines whether your income is low enough to get your debts discharged. There are two steps to the means test:

Step One: Compare your income to the median income in your state. Generally, if you "pass" the first step, you don't have to do the second step.

Step Two: Compares your disposable income and your unsecured debt.

See how your income stacks up. Find out your state median income, then talk to a lawyer about your legal right to file bankruptcy.

Keep in mind, if you don't "pass" the means test, you may still be able to file Chapter 13 bankruptcy and work to repay your debt (interest-free) over time.

The Repayment Option through Chapter 13 of the Bankruptcy Code

If you're facing foreclosure or looking for an interest-free repayment plan, Chapter 13 bankruptcy might help you out.

Under Chapter 13 bankruptcy, the court places you on an interest-free payment plan that usually lasts three to five years. During that time, you make one lower monthly payment directly to the bankruptcy court (no more dealing with creditors). They, in turn, make payments to your creditors according to a priority set by the court.

At the end of your repayment period, you may even qualify to discharge your remaining unsecured debt (such as credit card bills, medical debt, utility back payments, etc.).

Chapter 13 bankruptcy is typically an option for people who have steady income but have fallen behind on their bills.

In many cases, Chapter 13 bankruptcy can stop foreclosures thanks to the protection of the automatic stay and the chance to repay mortgage debts at a reasonable rate.

Get Answers To Your Questions - Free, No-Obligation Consultation

Not sure which category seems like the right fit for you? Curious if filing bankruptcy is a good option for you? Want to learn more about Chapter 7 and 13 bankruptcy?

A bankruptcy lawyer may help you make a better-informed decision. Learn how to file for it and what to expect if you do.

You can receive a free, no-obligation case evaluation. Simply fill out the quick case review form below to get started now. It's free.

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The Truth About Filing for Bankruptcy

Many Americans never thought they would have to consider bankruptcy as a way to get out of debt. But the truth is that many of us can't get out of the hole we're in. On top of the original debt, creditors pile on late fees and high interest rates, making it seem impossible to get any traction.

Once people learn the truth about the legal process of bankruptcy, they realize it can be a tool that helps them dig out of that dark debt hole.

More and more Americans are filing for bankruptcy to not only get out of debt, but to also save their homes from foreclosure and their cars from repossession.

Some creditors want to trick people into thinking bankruptcy will have a devastating effect on their lives, but that's just not the case.

Bankruptcy isn't meant to ruin lives--it was created to help people resolve their debts in a legal manner.

It's true that a bankruptcy can stay on your credit report for up to 10 years; however, it's also true that most people improve their credit after they file for bankruptcy. It makes sense - once you've resolved your debt and don't have that hanging over your head any longer, you can start to rebuild their credit.

Talk to a lawyer to find out how bankruptcy could really help you and what would likely happen after you file for Chapter 7 or 13 bankruptcy.

Millions Seek Bankruptcy Protection Each Year

The stigma of filing bankruptcy and fear that it will ruin your life are common, but are in fact unfounded.

Every day, people just like you decide to file for bankruptcy, and each year more than 1 million individuals, families and small business owners turn to bankruptcy to wipe the slate clean.

The thought of "going bankrupt" may have had a stigma to it decades ago, but the reality today is that most Americans are in debt - like credit cards, mortgages, students loans or medical bills - which can quickly become hard to manage due to medical issues, layoffs, lack of available work, and reductions in work hours/pay.

Unless you're a celebrity, filing for bankruptcy won't make headlines. In most cases, not even your employer has to know. Bankruptcy is designed to give you peace of mind and the opportunity to break free from the chains of debt.

Bankruptcy vs Debt Consolidation

Many people who end up filing bankruptcy have spent time considering other debt relief options, like debt settlement or consolidation. These programs are often seen as safer and less "scary" than bankruptcy.

However, these programs often don't provide the same total debt relief that bankruptcy can. Here are two major differences when your case is over:

  • Creditors are legally forbidden from trying to collect debts discharged in bankruptcy. If a creditor decides to try to collect a debt after your bankruptcy, the court will stop them. If a creditor decides to try to collect a debt forgiven through debt settlement, you have no such legal protection.
  • You don't owe any income taxes on debts discharged in bankruptcy. Typically, forgiven debts are seen as a source of income by the IRS, and are therefore taxed. This applies to debts forgiven in debt settlement or debt consolidation. However, there's an exemption for debts discharged in bankruptcy (plus some others), which gives you a true fresh start after your case is finished.

Learn more about bankruptcy vs other debt relief options.

After Bankruptcy: Your Credit

Even though bankruptcy can stay on your credit report for up to 10 years, the impact of bankruptcy on your credit may not be that different from your current situation.

If you're considering filing bankruptcy, you probably have several "negative" marks on your credit report, such as

  • past-due accounts
  • accounts in collection
  • a high credit-usage ratio

These negative marks can make getting new lines of credit difficult - and anything you do qualify for will likely come with a high interest rate and other terms that aren't friendly to you.

Filing bankruptcy can wipe the slate clean. If your debts are all unsecured (credit cards, payday loans, etc.), you can be on your way to a fresh financial start in just a few months.

Bankruptcy doesn't magically fix bad credit, but it can lift the burden of debt and put you back on the right track.

Find Out How to Put Bankruptcy Laws to Work for You

The bankruptcy court doesn't have to be a scary place. Most filers are only required to appear in court one or two times throughout their case.

Connect with a local bankruptcy lawyer for free. Enter your ZIP code below for a free bankruptcy evaluation by a sponsoring bankruptcy attorney:

Can Bankruptcy Help with Student Loans?

While a wide range of debts can be eliminated in bankruptcy, student loans currently hold a special exemption. Because most student loans are given or backed by the federal government, they can not be discharged in bankruptcy in most cases.

What options do you have if you're struggling with repaying your student loans? Aside from forbearance and consolidation, filing bankruptcy may offer some relief. Other common debts such as credit cards, medical bills and payday loans can usually be wiped out in bankruptcy, which may give you the financial relief necessary to repay your student loans.

And in some cases, the bankruptcy court will allow student loans to be included in a bankruptcy filing, particularly for disabled individuals who are unable to perform the type of work they went to school to learn.

If you're dealing with excessive student loan debt, talk to an attorney today to learn about your options, included Chapter 7 and Chapter 13 bankruptcy.

Total Bankruptcy - Bankruptcy Attorneys Nationwide

Total Bankruptcy is sponsored by a network of participating bankruptcy attorneys around the country. Since 2005, we have helped concerned people just like you learn about bankruptcy and connect with a local attorney to learn how bankruptcy could help.

Bankruptcy laws are different in each state, and many states have multiple districts that apply their own rules. That's why speaking with a local bankruptcy attorney is considered an important step in the process of understanding your options under the bankruptcy laws.

And while major metropolises tend to have many bankruptcy filers, dealing with debt isn't just a "big city" concern. People from all walks of life find themselves struggling with unemployment, medical bills and other financial burdens.

If you're ready to get help, simply fill out the free case review form on this page or call toll-free 877-349-1309 to find an attorney in your area.

When you meet with an attorney, you can discuss your financial situation and learn about your options to take control of your debt. Bankruptcy may not be right for everyone, but your attorney can help you determine if it's a solution for your financial needs.

Talking with a bankruptcy lawyer can help you determine if eliminating your debt through bankruptcy is the right path for you, or whether exploring other options, such as debt consolidation, debt settlement, or credit counseling, can provide debt relief in your situation. Get help today and take action against your debt.

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