What are your bankruptcy alternatives if you are facing a financial crisis and you are unable to file Chapter 7 bankruptcy?
This personal bankruptcy story was posted on the internet in August of 2010, “I have 4 credit cards that are probably charged off by now. I also have a personal loan which is about to be charge off with the bank, but I am current with my car loan. I have two other credit cards with low credit lines which I am currently paying a minimum payment. What can I do to avoid being sued? My net income is $1,560 per month, and I am barely make ends meet? I filed Chapter 7 bankruptcy 5 years ago. What other options do I have?”
Chapter 7 bankruptcy, commonly called a “liquidation bankruptcy”, is generally the simplest and quickest form of bankruptcy. Individuals, married couples, corporations, and partnerships can file Chapter 7 bankruptcy, but for this debtor, it is probably not an option. Under updated bankruptcy laws, Chapter 7 bankruptcy cannot be filed unless the debtor was discharged from the previous Chapter 7 bankruptcy more than eight years ago.
Although this debtor has filed a Chapter 7 bankruptcy within the last 8 years and cannot file Chapter 7 bankruptcy again, she can file Chapter 13 bankruptcy. A Chapter 13 bankruptcy can be filed within four years from the date of a Chapter 7 bankruptcy discharge.
Chapter 13 bankruptcy is available to individuals. It is considered a “wage earner’s” plan, and it allows individuals with regular income to develop a plan to repay all or part of their debts over a three to five year repayment period.
If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years, unless the court approves a longer period “for cause”. If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During the plan, creditors may not start or continue their collection efforts.
For those who qualify, there are advantages for filing for Chapter 13 bankruptcy including: saving your home from foreclosure, rescheduling secured debt payments, providing protection for co-debtors, consolidating your loans under one plan, keeping non-exempt property, and extending certain tax obligations, student loans, or other such qualifying debts. Debtors, including the one in our illustration, may also use bankruptcy to stop lawsuits.
Filing bankruptcy allows a judge to issue an automatic stay which will stop all collection actions, certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, wage garnishments, attachments, and debt collection efforts.
Filing Chapter 13 bankruptcy may not be as inexpensive, simple or fast as filing for Chapter 7 bankruptcy, but for this debtor, it may be the perfect solution for her to stop the debt collection efforts and lawsuits, restructure her debt payments and allow her to keep certain possessions.
If you are facing a lawsuit, contact a bankruptcy lawyer. Attorneys can help you eliminate the stress associated with debt. If you live in or around the metropolitan area of Columbia, South Carolina, contact us here today at www.betterbankruptcy.com . We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.
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