Following are answers to questions frequently encountered at the Law Offices of Baron J. Drexel as we help people make a fresh start with the help of a Chapter 7 or Chapter 13 bankruptcy proceeding. If you have further questions or need immediate assistance in a bankruptcy matter, contact the Law Offices of Baron J. Drexel to speak with a knowledgeable and experienced bankruptcy attorney.
How do I file?
Chapter 7 employs a means test based on a person’s income, assets, and liabilities, to determine if they have disposable income to apply toward debt repayment. If your household income is below the state median amount, you are automatically eligible for Chapter 7, and the means test is not even employed. If you do not qualify for Chapter 7 based on the means test, you may still be able to file for Chapter 13, unless the amount of your debt is very high. While individuals and businesses may file for Chapter 7, Chapter 13 is for consumers only.
Which Chapter is right for me?
Generally speaking, Chapter 7 is most attractive to consumers with large amounts of unsecured debt, such as credit card bills or medical bills that they cannot afford to pay off. These debts can be wiped away by the bankruptcy court, often without requiring the debtor to sell off any assets. Chapter 13 is more attractive to a homeowner facing foreclosure, or debtors with significant non-exempt assets which they desire to keep. In order to be successful in a Chapter 13 debt adjustment, you should have a steady job and some amount of disposable income which you can apply to a monthly payment plan.
Always consult with a qualified and experienced bankruptcy attorney before deciding which Chapter to file. Your attorney will want to know your entire financial situation, including your income, types of assets, and the nature and amounts of your debts, in order to give you the best advice about which route is best for you.
Can I keep my home?
If you are filing under Chapter 13, you can make up missed payments as part of the payment plan to save your home from foreclosure, as long as you stay current on your mortgage payments going forward. If you are filing under Chapter 7, you can exempt $75,000 of equity built up in the home as an individual, or $100,000 of equity as a couple. A debtor who is disabled or over the age of 75 can exempt $175,000 of equity in the home. Whether these exemption amounts would save the home from sale depends upon the overall value of the home compared to the amount of equity exempted.
What is an automatic stay, and how does it work?
The moment you file for bankruptcy, the court puts an automatic stay into place. This means that all attempts at debt collection or bill collection must stop while the bankruptcy is pending, including attempts to foreclose on a house or repossess a car or home furnishings. In order for a creditor to resume efforts at debt collection, it must apply to the court and receive relief from the automatic stay. The automatic stay is an important aspect of bankruptcy and provides immediate relief to consumers who are being hounded or harassed by creditors or who are in imminent danger of losing their home, car, or other important possession.
We are a federal debt relief agent.