At NORTHLAND BANKRUPTCY LAW we are committed to helping individuals get debt relief. We can help stop annoying creditor calls and put you on the path to financial stability. Located in the Northland of Kansas City, we provide legal services throughout Missouri. If we can help you, call us now for a FREE CONSULTATION at 816-702-1772 or send an email to: [email protected].
A Chapter 7 is a basic case, the fees are due before filing, and you generally are discharging debts such as credit cards, medical bills, and personal loans. You continue to pay secured debts if you want to keep the property securing the loan and it will not correct or fix a default if you are behind on a car or house loan. It can be very effective if planned out correctly. It will be very disappointing if it is done incorrectly as you could lose assets or worse.
A Chapter 13 is a more complex case, in this option the attorney’s fees are paid through the case (not upfront) and you are making a payment into a bankruptcy trustee for anywhere from 36 to 60 months. You are usually filing this kind of case because you are trying to keep a car, a house, pay tax debt, stop a student loan garnishment, or simply have no upfront money to do a Chapter 7. It is generally more effective than a Chapter 7 and more expensive but nowhere near as dangerous.
The bankruptcy system is generally setup to help the honest person who has fallen on hard times get a breather or a fresh start. There are trade-offs as the filing of the bankruptcy will generally ruin your credit, but for most people that is not the major concern when they are in a position to even think about a bankruptcy.
People can represent themselves in a bankruptcy case but it is probably the worst idea possible for most people. An attorney can take you through the options in bankruptcy, covering the advantages and disadvantages. You can find out if the options in bankruptcy protection would help you and the risks you might face.
Chapter 13 or Chapter 7?
The list of differences between the two types of bankruptcy in every case is so long it would be impossible and impractical to go through them all. The question above is the most misunderstood question by attorneys, non-attorneys, and everyone in-between.
There is almost never a “best” choice for what type of bankruptcy you should file. Many attorneys believe that Chapter 7 is always best and some believe that Chapter 13 is always best. You probably know someone who has filed and they have their opinion about what you should do. Almost everyone misses what is most important – getting informed about your options and making your own choice.
We will cover the cost benefit analysis of both types of cases, explain the options of both types of cases, and give you a recommendation based on your facts.
Bankruptcy Frequently Asked Questions
Bankruptcy involves a full and fair disclosure of all of your assets and debts, income and expenses, and some financial history. In exchange for the disclosure you receive a discharge of your allowable debts. The only debts that would survive the bankruptcy are taxes, student loans, child support obligations, and some other categories including injuries that were caused while you were driving under the influence of alcohol or drugs, etc.
Chapter 7 involves putting all of your assets (i.e., money and property) into an estate. An estate is just like what happens when someone dies -- they are not going to physically collect any of your money or property -- but the trustee is going to take anything that is not protected. We protect your money and property with state and federal laws called “exemptions.” The assets that the trustee takes will be used to pay back your creditors.
Chapter 13 is a repayment plan over time. You may not have to pay 100% of the debt back, but you will pay in proportion to what your budget allows.
This is an opportunity for the chapter 7 or chapter 13 trustee to sit down with you and your attorney to go over the information that is listed in your petition and schedules. The trustee will swear you in, ask you to state your name and address for the record, and then go through some basic questions. These meeting typically last 5-10 minutes. We will prepare you in advance of the meeting with a list of questions to expect and a copy of your schedules and petition to review. Do not worry, an attorney will be sitting right there next to you in case if you forget anything.
A trustee is an attorney hired to represent all of your creditors. They are independent contractors who work for the Department of Justice, and they are there to administer the bankruptcy case. Their job is to collect any money or property that is not protected by state and federal laws and to distribute that money to your creditors in proportion to what is owed and in accordance with the priority schedules in bankruptcy.
The means test is a test used to determine whether you are eligible for chapter 7 or need to file chapter 13. It looks at what your income is compared to the median income of your household size in the same state and determines whether you are automatically eligible or need to take an analysis of your expenses. If we look at your expenses, there are some fixed expenses that you are allowed to take and some that are based on your actual expenses. We will work through that with you and give you all of the information you need.