Bankruptcy
Benefits of Bankruptcy
It can be difficult to view bankruptcy as a good thing, but it can be. The bankruptcy laws are society's way of recognizing that bad financial situations can strike anybody and that people who honestly fell into this situation deserve a second chance. Unexpected large medical bills, for example, are a major cause of financial woes and bankruptcy can allow you to keep these from haunting you for the rest of your life. A bankruptcy isn't a pleasant event, of course, but like a strong medicine the long-term benefits can outweigh the short-term pain of enduring it. Atty. Yankes would be happy to talk with you about your situation to see if bankruptcy is the right help for you.
There are two main benefits of bankruptcy. The first is that when the bankruptcy is filed, all those telephone calls and letters from your creditors have to stop and the proceedings they have against you, such as a property foreclosure, are suspended. Not only can this help lessen your emotional distress, but it gives us time to arrange the right path for you to get out of your personal debt crisis.
The second main benefit, of course, is the possible reduction or elimination of your debt so that you can exit the bankruptcy on a reasonable financial footing. The amount that can be reduced or eliminated will depend upon your particular situation, your family income, the types of debts that you have, and the amount of assets (checking account, savings account, stocks, etc.) that you may have. Not all debt is treated the same, and the FAQ gives a a summary of the debt types and what can happen in bankruptcy.
What are the differences between a Chapter 7 and Chapter 13 bankruptcy?
The short answer is that a Chapter 7 bankruptcy is where all of your assets that are not covered by an exemption (and, for many people, the exemptions cover most, if not all, of what is owned) are sold and the money is used to pay your creditors. Any remaining unpaid dischargeable debt is eliminated. A Chapter 7 bankruptcy is comparatively fast, but gives you the least flexibility if there are certain assets (a home or a car, as examples) that you want to keep if they are not covered by an exemption. Sometimes, it makes sense for someone that is allowed to file a Chapter 7 to file a Chapter 13 instead due to the extra flexibility it gives in dealing with these assets.
The short summary of a Chapter 13 bankruptcy is that it is, typically, a 3 to 5 year period where you agree to pay all of your disposable income (the amount above the level that the Court determines that you need to live on) towards a fund that is used to pay off your creditors. As long as you keep paying into this fund as promised, any remaining dischargeable debt is terminated at the end of the plan.
Be aware that the bankruptcy laws tend to "favor" having people file Chapter 13 and, in some cases, eliminates the option of filing Chapter 7. Atty. Yankes can help analyze your situation, determine what options you have, and suggest which one makes the most sense for what you want to accomplish.
Frequently Asked Questions
Click here to go to the bankruptcy FAQ page.Getting started
Congratulations! You've already taken the first step to getting out of your debt crisis by coming to this section on getting started. The next step is to call or email Atty. Yankes to set up an appointment. (You can use the email box in the left margin.) You should bring at least the most recent six weeks of paystubs (for all family members), your most recent credit card bills, and the amount owed and paid monthly on other debts such as mortgage(s) or car loans.