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What is a Chapter 7 Bankruptcy?
How does a Chapter 7 Bankruptcy work?
Who is the Chapter 7 trustee?
What is a Chapter 13 Bankruptcy?
Who is the Chapter 13 Bankruptcy Trustee?
Is a Chapter 13 the same as those “debt consolidators”?
What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

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What is a Chapter 7 Bankruptcy?

Chapter 7 is the most common type of bankruptcy proceeding. It eliminates most types of unsecured debt. Secured debt is attached to a physical item which can be repossessed, such as an auto loan or a house mortgage.  Unsecured debt is not attached to a tangible item which can be repossessed, including: credit card debt, medical bills, most personal loans, judgments resulting from car accidents, and deficiencies on repossessed vehicles. See  “What kind of debts can you get rid of in a bankruptcy?”

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How does a Chapter 7 Bankruptcy work?

First, we start by preparing your petition. This is a list of all your assets (whatever finances and property you own) and all of your debts (who you owe money – also known as “creditors”).  Next, we file the petition with a Bankruptcy Court.  At this point, all of your creditors will be given notice by the Court that you have filed for bankruptcy. At this point, the creditors will have to cease whatever efforts they have been using to try to collect on your debt, including calling, writing, and sending collection agencies.  Also, at this point the Court will appoint you a Chapter 7 Bankruptcy trustee.

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Who is the Chapter 7 Bankruptcy trustee?

The Chapter 7 trustee is a person the government appoints to oversee your case. The main purposes of the trustee are to make sure that forms are being filled out correctly and to check that you are not committing fraud.

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What Else Does the Chapter 7 Trustee Do?

The Chapter 7 trustee checks all your assets listed in your petition to see if you have protection to keep your property from being taken and sold to pay your creditors.  That’s where we come in – our goal is to maintain protection on your property.

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How do you keep my property Protected?

The laws of protection are very complex, but we have decades of experience filing thousands of bankruptcy cases, and in almost every case, we were able to protect all of our client’s property.  The answer is that you need a competent attorney who knows the laws and has the experience to work on your case.

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What else happens in the Chapter 7 process?

You have to attend a meeting with your trustee.  We will attend this meeting with you as your lawyer to make sure it goes smoothly.  Usually, you only have to attend this one meeting, and they will give you a month’s notice so you can take off time from work if needed.

Most of the time, the Bankruptcy Court will discharge your case around 70 days after the meeting.  Once you have received the discharge, any and all dischargeable debts are officially gone. (See “What kind of debts can you get rid of in a bankruptcy?”)

Overall, a Chapter 7 Bankruptcy proceeding is a complicated process. You need an experienced bankruptcy attorney to guide you through it. Attorney Richard E. Sexner is the one you can trust to competently handle your Chapter 7 Bankruptcy filing.

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What is a Chapter 13 Bankruptcy?

Under a Chapter 13 Bankruptcy proceeding, your debts become restructured under a payment plan that is based on your income, so you can pay off your creditors however much you can afford per month. You will pay this monthly rate for three to five years and then whatever remaining debt you have left is completely cancelled (with certain exceptions).

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Just like under a Chapter 7, you will receive a trustee who manages your case.  You will make all payments in one sum to the Chapter 13 trustee. The trustee will use that money to pay out to all your different creditors.  This makes it easy for you to have only monthly payment.  Furthermore, the trustee will only pay whatever they determine a fair rate is to each creditor, which is sometimes as little as 1 cent on the dollar of what you owe.

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The goal of the Chapter 13 Bankruptcy is to give you a reasonable payment that will put you back on the right track and give you a set date when you know you will be out of debt. 

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Is a Chapter 13 the same as those “debt consolidators”?

Chapter 13 Bankruptcy is very different from debt consolidation.  When you go to a private “debt consolidator” they have to try to get your creditors to agree to a repayment plan, but the creditors have no legal obligation to work with them.   A Chapter 13 Bankruptcy, on the other hand, is administered by the authority of the Federal Government. It is not a negotiation.  Even though your creditors are getting paid less than what you owe them, they are forced to accept these terms or else they get absolutely nothing.

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In short, we don’t have to go to the creditors hat in hand and ask them if they will accept what we are willing to pay.  Instead, we show up with the authority of the court and they are forced to accept the terms.

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Furthermore: Your debt consolidation agency is a private company, and they may be late making payments on your behalf, or their payments may get lost in the mail. If this happens, the creditors can charge you late fees.  Hence, you may end up owing MORE money with a debt consolidation company than you did when you started. Under a Chapter 13 Bankruptcy plan, creditors cannot charge for late fees or penalties, since it is the trustee of the Federal Government paying and not a private firm.

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What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

Under a Chapter 7 Bankruptcy, all of your debts are eliminated in one shot.  Under Chapter 13, they are restructured into a payment plan.  Chapter 7 is preferable if you qualify, but not everyone qualifies.

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In order to decide whether you qualify for Chapter 7 Bankruptcy, the Bankruptcy Court will look at your income and expenses.  They will compare your income to an average income for a family of your size.  They will also look at any special expenses you have such as medical bills, child support, and school tuition.  If your income is too high, you might not qualify to file for Chapter 7 Bankruptcy.

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On the other hand, under a Chapter 7 the courts will also closely examine your assets in order to determine whether you have equity in anything that is of value that can be taken to pay back your debts.  Under a Chapter 13 the courts cannot take away your possessions, even very expensive ones.

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The Sexner Law Group can guide you to help determine which is the proper type of Bankruptcy for you.