The Best Bankruptcy for Your Family
Many families live from paycheck to paycheck. A third of the state’s households cannot meet a $400 emergency expense. With such a narrow margin, it’s very easy to accumulate considerable credit card debt. That’s especially true when the financial storms of life, such as divorce and job loss, hit unexpectedly.
It’s also easy to fall behind on home mortgage payments and other secured debt obligations. And, the clock is ticking. Legally, most lenders can begin repossession, foreclosure, or other procedures after just one missed payment.
A bankruptcy attorney has solutions for these problems. It’s important to file quickly if your family needs a financial do-over. The longer you wait, the worse your situation becomes.
Bankruptcy Basics
Your financial do-over begins with the Automatic Stay. Section 362 of the Bankruptcy Code protects your family and your property from things like:
- – Wage garnishment,
- – Repossession,
- – Lawsuits, and
- – Foreclosure.
In most cases, the Automatic Stay takes effect as soon as debtors file their voluntary petitions. Section 362 generally remains in effect for as long as the bankruptcy is pending. Moneylenders cannot get around the Automatic Stay without special permission from the bankruptcy judge. Your attorney can almost always prevent that from happening.
The Automatic Stay levels the playing field. It takes away the natural advantage that moneylenders have in these situations. Bankruptcy mediation basically does the same thing. If there is a legitimate dispute as to the amount owed, most bankruptcy judges order debtors and creditors to mediation.
At mediation, moneylenders have a duty to negotiate in good faith. In other words, they must make sacrifices to get a deal done.
Chapter 7 Bankruptcy
Most people who struggle with credit cards, medical bills, and other unsecured debts file Chapter 7 bankruptcy. The judge discharges most of these unsecured debts in only a few months. So, families get their fresh start quickly.
A real life Chapter 7 bankruptcy is nothing like a Monopoly bankruptcy. In the board game, players who file bankruptcy generally lose all their assets. But in a Chapter 7, a number of property exemptions apply, such as:
- – House,
- – Retirement account,
- – Motor vehicle,
- – Personal property, and
- – Computers or other items used for work.
After debtors file their petitions and schedules which list their debts and exempt property, a trustee (person who oversees the bankruptcy for the judge) reviews the case and makes a discharge recommendation.
Chapter 13 Bankruptcy
The so-called “wage earner plan” bankruptcy works a bit differently in several ways. For one thing, these bankruptcies last up to five years instead of just a few months.
The trustee’s role is much different as well. Chapter 13 trustees work with debtors to formulate an income-based debt consolidation plan. After debtors pay necessary monthly expenses, their disposable income goes to their creditors. Debtors have up to five years to catch up on things like home mortgage delinquency and past-due auto loan payments.
Typically, as long as all debts are retired before the bankruptcy ends, moneylenders must accept the income-based repayment plan. You pay what you can when you can, and the Automatic Stay remains in effect.
Contact Diligent Lawyers
Distressed debtors have several legal options. For a free consultation with an experienced Chicago bankruptcy attorney, contact the Bentz Holguin Law Firm, LLC. After-hours visits are available.
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