Bankruptcy Information

As our country continues its recovery from a deep recession, millions of Americans, even those who are fortunate enough to be employed, continue to struggle to pay all their bills each month. For those who have found that paying their creditors is no longer possible, bankruptcy may be a good option.

Bankruptcy law requires that consumers meet certain income eligibility requirements. This eligibility is determined by a test (called a ‘means test’) that takes into consideration the individual’s income relative to that of his or her state’s median income for a household of comparable size. The income requirement is only a starting point. For example, you may be eligible for a Chapter 7 based on your income, but you may also have assets that you do not want to lose if you file bankruptcy. In that example, you might wish instead to file Chapter 13 bankruptcy.

Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, the court appoints a trustee to represent the interests of your creditors.  Approximately six weeks after filing, you must attend a creditors meeting with the trustee to answer questions regarding your assets, debts, and so forth. After the meeting, the case remains open for at least another six weeks.

The effect of having your debts discharged is that you no longer legally owe your creditors and they are forbidden from trying to collect any unpaid debt. When this happens, you will receive a Notice of Discharge from the Court eliminating your debts. Click here to learn more about Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 is an option for consumers who do not qualify for chapter 7 relief.  Chapter 13 is often preferable to Chapter 7 because it enables you to keep a valuable asset, such as a house whose payments are not current, and because it allows you to propose a plan to repay your creditors over time—usually three to five years.

A Chapter 13 case begins by filing the same papers as under a Chapter 7. In addition, a workable plan for repaying at least part of your debts is filed with the bankruptcy court, which will approve the plan. You start sending payments directly to the Chapter 13 trustee shortly after filing. The trustee in turn pays your creditors according to the terms of the court-approved plan. When you have repaid your creditors according to the plan, the Court issues a discharge. After discharge, creditors are forever prohibited from collecting the discharged debts. Click here to learn more about Chapter 13 bankruptcy.

If you need help deciding which bankruptcy option is the best choice for your unique situation, contact Jodat Law Group, P.A. for a free initial consultation at (813) 225-7200 and speak with one of our experienced Tampa bankruptcy attorneys. We’ll be happy to answer your questions and help you better understand your options for financial recovery.

Further reading: Watch Out for Debt Settlement Scams