Chapter 7 Consumer, Chapter 13 Consumer

The Nettleton Law Firm will personally oversee your Chapter 7 bankruptcy or Chapter 13 bankruptcy. Offering affordable rates and payment plans, we feature compassion and personal attention with professionalism. Below is a brief summary of Chapter 7 and Chapter 13 bankruptcy basics, but to learn about how to best address your situation, call a bankruptcy attorney to set up a consultation.

The most common form of bankruptcy, Chapter 7 is a relatively short and straightforward process that allows you to wipe out most, if not all, of your debt. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.

Chapter 7 is open to most individuals and businesses that haven’t filed a previous bankruptcy in the past 6 – 8 years. Unless you fall under one of a few exemptions (current or recent active military service, for example) you must qualify to file under Chapter 7 based on your income. If you still don’t qualify, you can consider filing a Chapter 13 bankruptcy which has some benefits not available under Chapter 7.

Bankruptcy improves your life in two different ways. First, as soon as your case is filed you start to receive protection from your creditors under the “automatic stay,” a court order which prohibits your creditors from attempting to collect the debt. This will stop debt collection lawsuits, foreclosures, and garnishments immediately.

Chapter 7 bankruptcy will result in the discharge of the vast majority of your debts. That is, your balance will become $0.00. Keep in mind that some debts such as student loans, domestic support obligations, and others can’t be wiped out. Credit card, medical, and repossession debt are almost always dischargeable.

A Chapter 7 bankruptcy is also called a liquidation bankruptcy. What that means is that, in exchange for the discharge of your debts, you are expected to surrender certain assets to the bankruptcy court so that they can be sold to pay your creditors. While the concept of a liquidation may be intimidating, don’t let it scare you. In Colorado we have a generous exemption law that protects the vast majority of what you own from being surrendered to the court. For example, you get to keep most, if not all of your household goods, your cars, your home, your retirement fund, and more, provided they fall within certain limits. An experienced bankruptcy attorney will help you hold onto your things so you’re in the best position possible after your case wraps up.

A Chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this Chapter, debtors propose a repayment plan to make installments to creditors over three to five years. A significant advantage that Chapter 13 offers individuals is it offers individuals an opportunity to save their homes from foreclosure. Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under Chapter 13 protection.