Chapter 7 Bankruptcy

Most likely. It depends on the type of judgment entered against the Debtor and the assets that secure the judgment if a certified copy has been recorded. Yes, you can wipe out or reorganize most credit cards and medical bills.

It depends on several factors including, the type of tax owed, the date the return was filed, if the return was filed on time, whether a lien has been recorded, and several other factors. Typically, federal income taxes that are at least 3 years old and were filed on time may be subject to the bankruptcy discharge.

In most instances, yes, you can file for bankruptcy protection to save your property from a foreclosure sale.

Yes.

Chapter 7 Bankruptcy, also phrased as a liquidation, typically wipes out most of a Debtor’s general unsecured debts, including credit cards and medical bills, without the need to repay any of the debts. However, if a Debtor has any unexempt assets, those assets may be sold by the trustee to pay their Creditors. If a Debtor has limited assets, such as an older or fully encumbered car, it is possible they will be able to keep the car and still wipe out all the dischargeable debts without losing that asset. The outcome varies depending on each Debtor’s unique situation.

There are many variables which can affect whether a Debtor qualifies for a Chapter 7 Bankruptcy or whether a Chapter 7 Bankruptcy is the best option. Often, the Means Test under the Bankruptcy Code can be the determining factor. Typically, if the gross annual income of a Debtor is under $48,000 as a single member household and under $58,960 as a two-member household then the Debtor(s) is presumed to qualify for Chapter 7 Bankruptcy. The annual salary amounts are adjusted each year.

Bankruptcy is an excellent option for Debtors who are experiencing hardships that result in falling behind on monthly mortgage loan payment(s), homeowner’s association payments, auto loan payments and/or secured debts.

1. If a Debtor cannot afford to keep their property or does not want to keep their property, they may qualify for a Chapter 7 Bankruptcy and be able to Surrender the property and eliminate all their debts while eliminating the chance for the Bank to obtain a deficiency judgment after a foreclosure/repossession occurs. Debtors still must qualify to be able to file a Chapter 7 Bankruptcy. Debtors can also surrender their property in a Chapter 13 Bankruptcy.

2. If a Debtor wishes to keep their property and can afford to make payments sufficient to reinstate their loan(s) over a 60-month term, Chapter 13 Bankruptcy is a powerful tool. A Bankruptcy plan in which a mortgage is reinstated, consist of monthly mortgage payments plus the mortgage arrearage spread out over a 60-month period. Additionally, plan payments will include any other secured debt the Debtor wishes to reorganize, tax, child support arrearage, and other priority claims, trustee fees and often a pro-rata dividend to the allowed unsecured creditors.

Depending on certain factors, it may also be possible to cramdown (reduce) or entirely wipe out homeowner’s association arrearages, mortgages on investment properties, under-secured liens, certain auto loans, non-purchase money security debts, judicial liens, and various other secured debts.

A Debtor is a person or entity who owes a person or institution money. The person or institution that a Debtor owes money to is a Creditor. When you have a car loan you are the Debtor and your auto loan lender is the creditor. If you have credit card debt, mortgage debt, personal loans, or any other type of debt, even if you are current with your payments, you are a Debtor, as are more than 80% of Americans, who has a debt owed to a Creditor(s).

After filing Bankruptcy, a Debtor’s Credit Score will likely decrease. Bankruptcy is a legal right to wipe the slate clean, eliminate debt, and get a fresh start on your credit. A Bankruptcy filing will start the clock ticking for removing negative items from your credit report and allow you to begin working on reestablishing good credit.

Results vary but we recommend opening a Secured Credit Card at a local Bank or Credit Union immediately after obtaining a discharge in Bankruptcy. Use it often to pay bills and make sure that the balances are paid on time. After 3-6 months, begin applying for regular unsecured Credit Cards. Using a credit card to pay normal living expenses and making payments on time will help to reestablish good credit.