Bankruptcy Debt Relief, Filing bankruptcy, Chapter 7 & Chapter 13 information

We keep hearing that the economy is doing fine, but for more and more us, financial life just keeps getting
harder. The cost of gas, food, prescription medicine and just about everything else is up, but take-home pay
hasn't kept pace.

When things are stretched so thin, it takes just one or two setbacks - divorce, layoff
or an unexpected medical or repair bill - to put you over the edge into serious
financial trouble. Suddenly, through no fault of your own, you're in over your head.
Creditors are calling day and night, your family life is suffering and the stress is
getting unbearable.

Do you need debt relief?

Do you need professional help with your debts? Find out now. Click here to fill out our fast and confidential Debt Evaluation Form online.

What is bankruptcy?

Bankruptcy is a way for people who owe more money than they can pay right
now, to either work out a plan to repay the money over time, under Chapter 13,
or for most of the bills to be wiped out ("discharged"), under Chapter 7. While the
details are being worked out, creditors must stop all collection efforts against the
debtor.

What are the different types of bankruptcy?

Chapter 7 cases are commonly referred to as "straight bankruptcy" or "liquidation" cases. Under Chapter 7, a
trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. The
debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means
that the debtor does not have to pay most types of debts.

Chapter 13 is the debt repayment chapter for individuals with regular
income whose debts do not exceed $1,000,000 ($250,000 in unsecured
debts and $750,000 in secured debts). Chapter 13 gene- rally permits
individuals to keep their property by repaying creditors out of their future
income. Each chapter 13 debtor proposes a repayment plan which must
be approved by the court. The amounts set forth in the plan must be
paid to the chapter 13 trustee who distributes the funds for a small fee.
Many debts that cannot be discharged can still be paid over time in a
chapter 13 plan. After completion of payments under the plan, chapter
13 debtors receive a discharge of most debts.

What happens after I file my Chapter 13 Bankruptcy?

Many of our clients ask what they can expect once we file their Chapter
13 Bankruptcy. Of course, every case is different in detail, but the follo-
wing things occur in each Chapter 13 case we file:

Once your case is filed, you'll be assigned a DebtStoppers bankruptcy
attorney who will be familiar with all aspects of your case. This attorney
will present your case to the bankruptcy court for approval.

Your creditors are now prohibited from contacting you directly. This pro-
hibition is called the "automatic stay." While the court will send notice of
the stay to all of your creditors, this could take several days. So if you're
in danger of having a car repossessed, your wages garnished or you're
concerned with any collection activity, call your creditor with your bank-
ruptcy case number. That will stop the collection. You should also fax the
creditor a copy of the restraining order.

The first full payment in your Chapter 13 payment plan is due within 30
days of your filing date. While your payments will be deducted automati-
cally from your paycheck, automatic deduction may not be set up before
the first payment is due. So you need to send the scheduled payment
directly to the trustee until you see that the payments are being de-
ducted from your wages.

If you have a mortgage, you're responsible for making your morgage
payments as they become due. This is true even if the mortgage
company has stopped sending you statements.

How to tell if you need help:

1. You don't have any savings.
2. You make minimum payments on your credit cards.
3. You use credit cards for things you used to buy with cash, such as groceries.
4. You use increasing amounts of your total income to pay off debts.
5. You have more than two or three major credit cards.
6. After you pay your credit card bill, you increase your balance by the same amount (or more) the following month.
7. You're at or near your credit limit on your credit cards.
8. You count on the float in order to pay your bills, writing a check hoping that you'll be able to cover it by the time it clears your bank.
9. You're unsure of the total amount you owe on all your debts.
10. You take out cash advances on your credit card to pay other bills.
11. You've tried to make a purchase with your credit card and been declined.
12. You've been denied credit.
13. You bounce checks.
14. You get calls from collectors.
15. You lie to your spouse or other family member about your spending, hide credit card statements or constantly argue with family members about your finances.

The moment you file your Chapter 13, you're deemed current with your creditors. So you want to be sure and stay
current in order to preserve your fresh start.

30 days after we file your case, there will be a meeting of your creditors at the trustee's office. You are required to
attend this meeting in order to complete your Chapter 13 plan. You will need to bring with you

photo ID

A Social Security Card

A recent pay stub

For more, click here to watch a video of attorney Patrick Semrad discussing the Chapter 13 process.

Do you need professional help with your debts? Find out now. Click here to fill out our fast and confidential Debt Evaluation Form online.

The bankruptcy definitions above are from the Bankruptcy Handbook prepared by the Office of the Clerk, United States Bankruptcy Court, Eastern District of California.