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There are many reasons for financial difficulties, such as loss of a job, death of a bread winner, too many credit card purchases, identity theft or inaccurate information clouding your credit. Money problems can be emotionally wrenching and seriously damage family relations. In some cases, it is possible to negotiate with creditors to lower payments or to accept lump sum settlements. In other cases, bankruptcy protection might help those who are unable to pay their bills.

ALTERNATIVES TO BANKRUPTCY

Our lawyers can advise you about the alternatives to seeking relief under the bankruptcy laws. One alternative is to contact your creditors to request a discount or additional time to pay.

Another is to seek the help of a credit counseling service. Consumers should be wary of these companies because they have come under scrutiny in recent years due to many customer complaints and bad business practices.

A third alternative is to borrow money to pay off your debts, replacing them with a single loan and one monthly payment. Such refinancing can make sense if the repayment period is extended at a lower interest rate. However, many people experiencing financial troubles do not have a good enough credit rating to qualify.

Each of these alternatives has benefits and disadvantages that your lawyer can explain. You may find that bankruptcy is your best option.

CHOOSING A BANKRUPTCY OPTION

There are three options under the bankruptcy laws: Liquidation, repayment plan, or reorganization.

In liquidation, called a Chapter 7 bankruptcy, the court appoints a case administrator, called the trustee, to oversee your case. At the end of the case, the court will declare that your debts are discharged and creditors’ claims against you are void. This type of case can take 3-6 months from the date of filing to discharge.

In a repayment plan, called a Chapter 13 bankruptcy, you pay a portion of your monthly income to a trustee for distribution to your creditors. This type of bankruptcy is for people who have a steady income coming in, but are not able to pay all of their debts. You will pay anywhere from 0-100% of your debts depending on your income. At the end of your case, any remaining debt that you owe will be discharged and creditors’ claims against you are void.

Chapter 13 can also help if you are behind on your car or mortgage payments, underwater on a second mortgage, or behind on taxes or child support. This type of case is open for 3-5 years, depending on your circumstances.

Chapter 11 is the reorganization chapter, which is most commonly used by corporations or individuals that owe too much debt to qualify for Chapter 13. In Chapter 11, a reorganization plan must be approved by the creditors and the court.

When a debtor is in business, faced with lawsuit or a large IRS levy, Chapter 11 might be a possible solution. Before a decision is made to undertake a Chapter 11 bankruptcy, the debtor should consult an attorney experienced in Chapter 11. Our attorney is available to consult with you regarding the advantages and possible disadvantages of filing under Chapter 11.

Will you have to give up your house, car, or other property when you file for bankruptcy? In general, no. Most people who file are able to claim all of their property as exempt, and therefore they get to keep all of their property. The more valuable property you own, the greater the chance that some of your property will be taken by the trustee. Our bankruptcy attorney can evaluate your case and advise you regarding what property can be protected.

Debt matters include:

  • Debt collection defense
  • Identity theft defense
  • Bankruptcy filings
  • Credit repair
  • Other debt matters

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