I’m financially stuck and considering bankruptcy but don’t know what to do.
The time of the holidays and looking toward the New Year is supposed to bring great joy, gathering and thanks.
For many, especially this year, it may instead bring great stress and worry. Maybe you didn’t expect to lose your job or wind up with reduced hours during the COVID-19 pandemic. Even long rent moratoriums can’t solve every financial woe. Maybe on top of an already chaotic year, medical bills took you by storm.
There’s also the fact that even before COVID-19 existed, many were just making it by, one financial snafu away from crumbling. And then COVID-19 existed.
If you’re wondering how you’re going to get caught up, let alone how to stay afloat, let’s discuss bankruptcy. We know — it’s not at all what you planned for a New Year’s Resolution. But Chapter 7 or Chapter 13 Bankruptcy is a solid way to start clean. Don’t look at this as a financial failure as a sign of giving up. Look at it as a way to put your best foot forward in 2021 with a breath of fresh air and a clean slate.
Whether you still just have some questions, need someone to help you decide if this is the right decision or are ready to wipe your slate clean, give us a call today. We’re here to help.
Differences between Chapter 7 and Chapter 13
The primary difference between Chapters 7 and 13 Bankruptcy is that Chapter 13 bankruptcy involves paying back at least a portion of your debts, depending on what you can afford of it. This is why you often hear it called “reorganization bankruptcy.” The best part about reorganization bankruptcy? If you make all of your payments in the approved payment plan, none of your assets can be taken by the court.
You and your attorney create your repayment plan together, then present it to a court. The judge then approves your plan, or sends you back to the drawing board to revise and re-present your plan. The good news is that your attorney is with you every step of the way.
Your repayment period will last anywhere from 3 to 5 years. How long you exactly pay on your debt depends on how much of your debt you can take on. Once your repayment plan is complete, you’re considered out of debt! This is where the breath of fresh air takes place on your end. Imagine a 2021 knowing that, no matter what happens, you’re out of debt.
Chapter 13 bankruptcy may be just what you need if you wish to be held accountable to getting some debts paid, but your expenses far exceed your income. The sooner you contact us to get your plan going, the better. That way we can get a petition started, completed and filed in court as soon as possible.
Then there’s Chapter 7 bankruptcy. This is a great option if you’re in a situation where you’re unable to make monthly payments, you’re constantly getting calls from creditors or you’re even facing wage garnishment from your job, or facing a possible home foreclosure.
When you file for Chapter 7 bankruptcy, you’re discharged from your debts. That’s it. No repayment plan. This removes even more stress from your life — once it’s done, the debt is gone. Of course, there are exceptions of debt that can’t be removed by Chapter 7 bankruptcy — this includes debts like child support and taxes. Sitting down and talking to an experienced bankruptcy attorney will help determine exactly what stays and goes should you decide that Chapter 7 bankruptcy is the best choice for you.
Also keep in mind that filing for Chapter 7 bankruptcy may come at a cost, with either state or federal exemptions. These exemptions determine which specific dollar amount you can have in assets. An example of this is your car. The car’s valuation would be determined up to a certain amount before it may be seized to go toward some of your outstanding debt.
Don’t panic. You get to choose between the state exemptions and federal exemptions, depending on which helps you the most. And many of our clients lose very little in their Chapter 7 bankruptcy filing — or nothing at all. This is why it’s important to have an experienced, compassionate attorney on your side. We’re happy to take that role.
This year, we wish everyone a safe and happy holiday season, and a much better 2021. That having been said, don’t look at the possibility of bankruptcy as a financial failure or a sign that you gave up. Look at it as a brand new start to your brand new year, and take the first step of 2021 forward with a breath of fresh air. Give Us A Call Today!