As a consumer debtor, you will usually have two options when deciding to file bankruptcy; Chapter 13 or 7 under the Bankruptcy Code. The question is which is better?; and which one should you file? The answers to these questions are as unique as your individual circumstances.
Under Chapter 7 of the Bankruptcy Code, you are declaring that you have no ability to pay your debts at all. You are, in a sense, liquidating your estate. From the moment you file your case under chapter 7, the trustee takes control and has the right to take any assets available to pay your debts. However, you have certain rights to retain assets under California Code of Civil Procedure Sections 703 or 704. This means, that you will be able to keep your home, cars, retirement accounts, personal belongings, up to the limits pursuant to the law. These cases usually conclude within about six (6) months.
Under Chapter 13, you are declaring that you have some disposable monthly income to apply toward your debts and you are asking the Court to allow you to restructure that debt over time and allow you to pay only what you can afford.
Chapter 13 is, in my opinion, the best choice to save your home, dispute debts owed, and otherwise hold your creditors accountable for any mistakes in your debt obligations, accounting, collection activity, fraud or abuse. These cases require a longer period of time, usually up to five (5) years, and there are additional reporting duties involved. You are strongly discouraged from filing a chapter 13 bankruptcy without an attorney because of the additional local rules, accounting and reporting requirements.
Most everyone has thought of filing bankruptcy as simply filling out a bunch of forms. I would have said that before the BAPCPA in 2005. Now, with the sub-prime mortgage meltdown and their complex financial contracts; scams, despair and desperation of the banking industry; and the complexities of the Bankruptcy Laws, you need to consult with your personal bankruptcy lawyer before your case is filed. Your bankruptcy lawyer will save you time and money by reviewing your current financial situation and create strategic plan to eliminate your debt with the least amount of money out of your pocket.
Posted By Ron Siegel
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Ron Siegel is a Radio Show host on the Real Estate Radio Network and counsels clients in all matters Real Estate Related – Mortgage Banking, Real Estate Purchases and Sales, Short Sales, Foreclosures, Credit Repair. Reach on Ron Siegel at Ron@MBEhoa.com – 800.306.1990 – www.MBEhoa.com.
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