Chapter 7 Bankruptcy
Chapter 7 is also referred to as a liquidation. That is because if the Debtor does have non-exempt assets, (and this is the exception), then those assets are liquidated and the proceeds are distributed to creditors. A far more likely scenario within the context of a Chapter 7 is where the Debtor has little in the way of non-exempt assets, keeps all of his property with no distribution to creditors, and receives a discharge of his debts within 3-4 months after filing the case. In many cases, income taxes can be discharged in a Chapter 7.
Chapter 13 Bankruptcy
Chapter 13 is also referred to as a reorganization, or a wage earner’s Plan. That is because the Debtor is usually making monthly payments to the Chapter 13 Trustee, who takes those payments and distributes them to creditors pursuant to a formal Chapter 13 Plan approved by the U.S. Bankruptcy Court. The Plan lasts anywhere from 36 to 60 months.
The most obvious question which might arise after reading the foregoing is whether a person should file under Chapter 7 or Chapter 13. The answer to that question is dependent upon a number of factors. In some instances, where the Debtor’s income is above the state median, he will be required to file Chapter 13 and pay something back to unsecured creditors through the Chapter 13 Trustee. In other instances, the debtor may actually wish to file Chapter 13, as it may benefit him even though he will be making payments for a minimum of 3 years. Specifically, filing a Chapter 13 will allow the Debtor to avoid foreclosure of a home or repossession of a vehicle if the Plan submitted contains provisions where the arrearages are cured over the life of the Plan. Similarly, if the Debtor has property which he does not wish to surrender in a Chapter 7 he may be able to keep it in a Chapter 13 provided he pays an amount at least equal to the value of the property over the life of the Chapter 13 Plan. Equally important, a homeowner may strip off a second mortgage and receive a discharge from that debt in a Chapter 13. Finally, if you have received a discharge in a prior Chapter 7 within the last 8 years, and need to file another case, you will need to file a Chapter 13. There are other reasons to file a Chapter 13 petition but they are less common than those mentioned above and beyond the scope of the discussion in this website.
I have considerably less overhead than most attorneys and am able to pass considerable savings on to you, my client.
The office charges between $650.00 and $1200.00 for Chapter 7 bankruptcy petition. There is also a filing fee of $335.00 which is paid to the United States Bankruptcy Court when your case is filed. A payment plan is possible where a third party with verifiable employment will sign a written guarantee for any unpaid fees. That person will then become a creditor of the filing party, and the potential debt will be discharged. In no event can I file a Chapter 7 without having received at least $335.00 which as stated above, is the amount of the filing fee.
For a Chapter 13, the fee is between $2,400.00 and $3,200.00. However, since you will be making payments in a Chapter 13 and I can get most of the attorney fees from these payments, the minimum amount which must be paid for a Chapter 13 prior to filing is $810.00. The remainder can be received from your payment plan
Chapter 7 and Chapter 13 Filers
My office provides a convenient method whereby you can enter most of the information we will need onto forms which will provide the basis for the information required in the official bankruptcy forms. Once the information is entered, it is downloaded to my bankruptcy software to efficiently and effectively file your case. This is a secure web site and the information generated cannot be accessed by any one outside of our office.