The point of filing bankruptcy is to get relief from your debts. So, when and how DO those debts get "discharged"--legally written off--in a regular Chapter 7 bankruptcy?
It's often the combination of tools that come with Chapter 13 that allows you to keep your home. Because Chapter 7 has only some of these tools, sometimes it can't do nearly as much for your home as Chapter 13 can.
A mere list of the many ways that Chapter 13 can help save a home can start sounding dry. So here's a powerful example that shows off some of its extraordinary advantages.
Chapter 13 is extraordinary in the number of distinctive ways it can solve debt problems endangering your home. Here are five more ways beyond the five of the last blog.
If you are behind on your car or truck loan and a Chapter 7 case will not help you enough, file a Chapter 13 case instead so that you can keep that vehicle.
In most Chapter 7 "straight bankruptcies," most debts are legally written off, especially debts that are not secured by any collateral and don't belong to any of the special "priority" categories of debt. But how about in a Chapter 13 payment plan? What determines whether these creditors get paid, and if so how much?
Your "left-over debts"--those which are neither secured by collateral nor belong to any of the special "priority" categories--often don't drive the decision about whether to file Chapter 7 or 13. But you still need to know how these "general unsecured debts" are handled under these two options.
The most practical questions you likely have if you are considering bankruptcy is what it will do to each of your debts.
The closing of your business, followed by your personal bankruptcy filing, often ends threatened or ongoing business litigation against you. But here are three situations where that litigation could well continue regardless of the bankruptcy.
If you owe more business debt than consumer debt, then you can avoid not only the "means test" but also some other roadblocks to a successful post-business Chapter 7 bankruptcy case.
When a small business fails, its owner or employee is sometimes accused of causing or hastening that failure through fraud or other intentional bad behavior. If that person is already considering filing a bankruptcy to deal with the financial fallout of the closing of the business, how are those accusations going to be handled in that bankruptcy case?
If you're seriously considering closing down a struggling business, you are likely very concerned about personal damage control: how do you end the business without being pulled down with it?
Do you have a small business in your own name that would be successful if it only got a break from its debts? A Chapter 13 case would likely greatly reduce both your business and personal monthly debt service while you continued to run your business.
Powerful Chapter 13 gives you tools to solve your mortgage problems from a number of different angles. Plus it gives you other tools to deal with tax, support, and judgment liens on your home.
My own professional experience about the dangers of filing bankruptcy without an attorney is validated by carefully analyzed data.
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