Filing bankruptcy enables eligible consumers and businesses to eliminate or repay their debts under the protection of a federal bankruptcy court. A primary function of bankruptcy is to discharge certain debts to give honest people a fresh start. To simplify, personal bankruptcies can be divided into two types: liquidation and reorganization.
In Title 11 of the United States Code (Federal Bankruptcy Code), there are two chapters that deal primarily with personal bankruptcy filings: Chapter 7 Bankruptcy (Liquidation) and Chapter 13 Bankruptcy (Individual Debt Adjustment). According to federal bankruptcy rules, a debtor’s eligibility to file bankruptcy under Chapters 7 or 13 is characterized by their financial circumstances and dependability of future income. Bankruptcy help is available to consumers petitioning for bankruptcy protection from creditors. A bankruptcy lawyer breaks down the complicated and essential information required to fully understand a debtor’s rights and obligations when filing bankruptcy.
Chapter 7 Bankruptcy permits eligible debtors to liquidate their assets to pay a portion of their debts. A bankruptcy trustee acts on the behalf of the debtor, assembling and selling of the debtor’s assets and using the proceeds to pay certain creditors. Since it is typical that not all of the creditors will receive money from the proceeds, some of the remaining financial obligations will be “forgiven” or discharged. Moving forward, the debtor is not liable for the discharged debts.
Filing Chapter 7 Bankruptcy will result in the loss of various property or assets; however, it may be possible to protect some property from creditors’ claims because the property might be exempt under federal or state bankruptcy laws. Debtors should consult a bankruptcy lawyer to determine the property exemptions available in the state where they live.
Chapter 13 Bankruptcy acts like a consolidation loan that enables eligible debtors to work with a qualified bankruptcy trustee to develop a creditor repayment plan. Rather than surrender property, a repayment plan allows debtors to use future income to pay off a default over a three-to-five-year period. With bankruptcy help from a court-appointed Chapter 13 trustee, a debtor repays a percentage of what he or she owes at lower increments. The debtor makes regular payments to the trustee who then distributes payments to creditors. After you have made all the payments under your plan, your debts are discharged.
Filing a petition for bankruptcy protection under Chapter 7 or Chapter 13 automatically stays (stops) most collection actions against the debtor and their property. As long as the stay is in effect, creditors cannot pursue legal action, garnish wages or make telephone contact demanding payments. In the case of Chapter 13 Bankruptcy, an automatic stay can stop foreclosure proceedings and permit a debtor to resume making timely mortgage payments and bring past-due payments current over time. Chapter 13 bankruptcy rules also protect individuals who have co-signed for liability of loans or property subject to the debt adjustments.
Milwaukee Bankruptcy Attorneys
If you’re looking for a bankruptcy attorney in the State of Wisconsin, MyDebtAdvisors is a great place to get your free consultation. They have offices in 8 cities throughout Wisconsin.
Bankruptcy lawyers are able to provide you with valuable bankruptcy advice. In light of the recent changes made to bankruptcy law, an attorney will help you understand your rights and the consequences of your bankruptcy case. If you decide to file a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy petition, the advice and assistance of an experienced bankruptcy lawyer is generally a worthwhile expense.