Legal.com Links:

Home
Bookstore
Legal Forms
Legal Service Plans
Legal Research
Legal Tech

Resources for:

Law Students
Legal Professionals

Legal Areas:

Bankruptcy
Criminal
DUI DWI
Family-Divorce
Personal Injury
ADR-Mediation

Articles:

Introduction to Bankruptcy Law

Frequently Asked Questions

Ten Tips For Breaking the Debt Cycle

Credit Repair Warning Signs

There are two types of consumer bankruptcy. Each is intended to help consumers in financial crisis, but the solutions offered are very different.

Chapter 7 bankruptcy, or liquidation, is more common. A Chapter 7 bankruptcy can eliminate a lot of unsecured debt (credit cards, medical bills, old utility bills, unsecured personal loans, etc.), and can generally be completed within just a few months. In a Chapter 7 bankruptcy case, the trustee can liquidate (sell) non-exempt assets to pay creditors, but most people who file for Chapter 7 bankruptcy don't have any non-exempt assets, and so are able to keep their property while eliminating unsecured debts.

Chapter 13 bankruptcy is often the solution of choice for people who have a lot of secured debt, such as car loans and mortgages, and want to keep the property that serves as security for the loans. In a Chapter 13 case, the debtor enters into a repayment plan that allows 3-5 years to catch up on past due payments.

Since the bankruptcy law change in 2005, there have been a lot of misunderstandings about bankruptcy. For instance, many people have been led to believe that almost no one can file for Chapter 7 bankruptcy anymore. That's simply not true. Although the new bankruptcy law that took effect in October, 2005 added some hoops for debtors to jump through, consumer bankruptcy attorneys and credit counseling agencies have found from the beginning that the Chapter 7 means test actually prevents very few debtors from filing under Chapter 7. In fact, some credit counseling agencies have said that by the time most debtors come to them for the newly-required pre-filing credit counseling, they have no other realistic option! The safety net of bankruptcy is still available to most consumers in financial crisis.

Not sure whether bankruptcy is the right option for you? A local bankruptcy attorney can answer your questions and explain the bankruptcy process to you. Schedule your free, no-obligation call right now!

©2008 Legal.com, Inc. All rights reserved
Legal Recourse and Legal.com™ are trademarks of Legal.com, Inc.

The opinions expressed in the articles collected here are the opinions of their authors and not necessarily the opinion of Legal Recourse or Legal.com. Trademarks are the property of their holders.