Chapter 7 bankruptcy is often referred to as liquidation bankruptcy. You will be allowed to keep your assets which are exempt under state law and your non-exempt assets are often liquidated by the chapter 7 trustee and the proceeds are distributed to creditors according to the priorities established in the code. If you qualify for a chapter 7, this option allows you to eliminate most debts without paying your creditors back.

A chapter 13 bankruptcy is commonly referred to as the reorganization bankruptcy. Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debt. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. Most people who file for chapter 13 are trying to save homes, cars and/or to pay IRS debt; in some instances chapter 13 is used to protect assets.

Immediately upon filing a bankruptcy case, an automatic stay is imposed. This stay acts as an injunction against any type of collection by creditors. Chapter 7 and chapter 13 bankruptcy come with an “automatic stay” which can prevent creditor’s attempts to repossess your property. The stay is used to stop foreclosure and the repossession of vehicles. The automatic stay also prevents creditors from engaging in collection activities, like intrusive calls and letters or garnishing bank accounts and wages.

If you’re seeking financial relief and rejuvenation for your business, know that bankruptcy may still provide you with options. Not only can a business owner file for either Chapter 7 or Chapter 11 bankruptcy, but a sole proprietor may also explore the possibility of filing for Chapter 13 bankruptcy. Additionally, if you’re searching for an alternative to business bankruptcy, we encourage you to contact us and ask about Assignment for the Benefits of Creditors, or ABCs.

Repossession occurs when a bank or other loan holder reclaims a large purchase once you have missed a payment or otherwise violated the terms of your financial agreement. Vehicles, furniture, and large appliances are among the most commonly repossessed items. That being said, bankruptcy may provide you with protection from this process in that an automatic stay will be enacted, thereby stopping repossession. This may occur under Chapter 7 or Chapter 13 bankruptcy.

As one’s home mortgage is considered a secured loan, failure to pay taxes, mortgage payments, or homeowner’s association fees may result in foreclosure. When a home is foreclosed upon, the property itself is repossessed and placed back on the housing market. However, once a Chapter 7 or Chapter 13 bankruptcy is filed, an automatic stay will be imposed and the homeowner may agree to a repayment plan or loan modification process to avoid foreclosure.

Not to be mistaken with refinancing, mortgage modification involves changing the terms of your existing home loan. Once a homeowner files for bankruptcy, they may opt for mortgage modification to avoid foreclosure. This process involves court oversight, mediation, and strict deadlines. Take note, however, that not everyone who applies is approved; that is, individuals who are both employed and have not applied for this process recently are the most qualified for a mortgage modification.

As one can never account for the future, ensuring that you have an estate plan completed is vital. In the event of death and/or incapacitation, an estate plan involves one’s final will and testament in addition to comprehensive documentation of living wills, trusts, power of attorney, and healthcare surrogate designation. Estate planning is important because it will establish your final wishes as well as account for your property, dependents, beneficiaries, and other essential assets.