Bankruptcy

What Bankruptcy Can Do For You

At Gresk & Singleton, LLP, we understand that these tough economic times have put many individuals and families in difficult financial situations. Perhaps you or your partner suffered a cut in hours at work, or lost your job completely, and now you cannot pay your monthly bills. Perhaps you are one of millions of Americans affected by the housing crisis who lost your home to foreclosure or are currently facing foreclosure. Perhaps you or a family member suffered a medical emergency or prolonged illness, and you are buried in medical bills. Nearly every day now your creditors are calling or sending you mail requesting payment, and some are even suing you or garnishing your wages.

The day you file your bankruptcy petition, your creditors must stop contacting you trying to collect a debt and you begin your fresh start. With only a few exceptions, anything you earn from that day forward is yours to keep and does not become part of your bankruptcy. After completing all the steps of your bankruptcy, you will then receive a discharge of your debts. Contact us for a free consultation with an attorney to determine which type of bankruptcy is right for you.

Types of Bankruptcy

Chapter 7

Chapter 7 bankruptcy is often called liquidation or straight bankruptcy. In a Chapter 7 bankruptcy, you list all of your assets and all of your debts in your bankruptcy petition. A Chapter 7 bankruptcy trustee reviews your petition and looks for nonexempt assets he can sell and then distribute the proceeds to your creditors. In the majority of cases, the trustee cannot collect anything for sale because all of the property is exempt. If your case is determined to be a “No Asset Case,” you keep all of your property and obtain your discharge in bankruptcy.

Chapter 13

Chapter 13 bankruptcy is known as the debt repayment plan bankruptcy. In a Chapter 13, you propose a plan to pay your monthly disposable income to the Chapter 13 trustee for 36 to 60 months. The trustee then determines what portion of your payments each of your creditors receives. After you plan period is over, the portion of unsecured debts that remain will be discharged. Generally, creditors only receive pennies on the dollar of what they are owed.

A Chapter 13 case might be right for you if:

  • You have a regular source of income. To be eligible to file a Chapter 13, you must have a regular source of income to be able to make your plan payments.
  • You have property not covered by an exemption that you want to keep. If your property is worth more than the allowed exemption, you can keep it in a Chapter 13.
  • You are behind on mortgage or vehicle payments and you want to keep your house or vehicle. You can propose to pay on the arrears on your mortgage or car payments to get them caught up over the life of your Chapter 13 plan. For this reason, you may be able to save your home from foreclosure or your vehicle from repossession by filing a Chapter 13 bankruptcy.