CHAPTER 7 BANKRUPTCY

• Chapter 7 bankruptcy can reset your finances so that you no longer live with unmanageable debt.  It allows for the discharge of non-exempt debt. This debt can include:

• Medical debt

• Credit card debt

• Deficiency balances from foreclosures and repossession

• Cell phone bills

• Debt owed directly to specific retailers

• Pay day loans

• Utility bills
   

 The filing of a Chapter 7 petition will:

• Release frozen bank accounts

• Stop harassing calls by creditors

• Put a stop to, or prevent, wage garnishments

• Stop or prevent Foreclosure proceedings

• Stop or prevent an eviction under certain circumstances

CHAPTER 13 BANKRUPTCY

• Chapter 13 debtors keep all of their assets while  making payment on secured debts like a mortgage or vehicle as they come due. The debtor develops a three or five-year payment plan rather than simply having all of the debtors unsecured non-priority debts discharged.

 

The plan will include the following:

• Secured debts;

• Unsecured priority debts like child support; and

• Some or all of any debts on credit cards and other non-priority unsecured debts
   

• Payments are made each month to the U.S. Bankruptcy Trustee, who in turn distributes the amounts to creditors listed in the plan. In addition the debtor also needs to keep the mortgage, car note and other secured obligations current as they come due. At the end of a Chapter 13, the debtor receives a discharge, which will extinguish any remaining balances on unsecured non-priority debts such as credit cards. 

CHAPTER 11 BANKRUPTCY

• Chapter 11 bankruptcy is commonly know as a business reorganization bankruptcy.  Creditors recover a larger percentage of debt than would be possible with liquidation, while your debt payments become more manageable and you remain open for business.
   

• Chapter 11 requires the consent of creditors to a debt repayment plan, which must show how creditors will gain more from the plan than they would from liquidation.