Chapter 7 and Chapter 13 Bankruptcy. How, What, and When, Answered by GordonBoutwell

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									                This is an excerpt from the




    CONSUMER’S GUIDE TO
       BANKRUPTCY

                 IN THE FULL GUIDE YOU WOULD GET:

        A basic understanding of the 2 main types of consumer bankruptcy,
        valuable insights into evaluating bankruptcy as a debt reduction tool,
          and practical guidance for finding a quality bankruptcy attorney.

                                 Topics covered:

-   An overview of the bankruptcy process.
-   Key bankruptcy terms like: “discharge,” “automatic stay,” and “exemptions.”
-   Chapter 7 bankruptcy: what it is, how it works, and when it is preferred.
-   Chapter 13 bankruptcy: what it is, how it works, and when it is preferred.
-   How bankruptcy can save a home from foreclosure or a car from repossession.
-   5 good reasons to file bankruptcy.
-   5 good reasons not to file bankruptcy.
-   3 alternatives to filing for bankruptcy.
-   5 questions to ask when interviewing a prospective bankruptcy attorney.




          Want a free copy of this guide?
       Just send an email to bkguide@llgtn.com and look for it in your inbox!
                                          CHAPTER 7 BANKRUPTCY



                                                    HOW IT WORKS
Chapter	
  7	
  is	
  called	
                      	
  
                                                    •      An	
   appointed	
   Chapter	
   7	
   Trustee	
   liquidates	
   any	
   of	
  
Liquidation.	
  	
  It	
  is	
  also	
                     your	
   non-­‐exempt	
   assets	
   and	
   uses	
   the	
   proceeds	
   to	
  
referred	
  to	
  as	
                                     pay	
  your	
  creditors.	
  	
  PLEASE	
  NOTE:	
  Rarely	
  are	
  there	
  
“straight”	
  bankruptcy.	
                                any	
   assets	
   to	
   liquidate,	
   as	
   the	
   laws	
   of	
   the	
   state	
   of	
  
                                                           Tennessee	
   usually	
   allow	
   you	
   to	
   protect	
  most,	
   if	
   not	
  
                                                           all,	
  of	
  your	
  assets.	
  	
  	
  
                                                    •      You	
  must	
  qualify	
  for	
  7	
  by	
  passing	
  the	
  “Means	
  Test,”	
  
                                                           which	
   compares	
   your	
   average	
   monthly	
   income	
   to	
  
                                                           that	
  of	
  a	
  similarly	
  sized	
  household	
  in	
  Tennessee.	
  	
  
                                                    •      Most	
  Chapter	
  7s	
  last	
  about	
  4	
  months,	
  from	
  the	
  date	
  
                                                           you	
  file	
  until	
  the	
  date	
  you	
  receive	
  your	
  discharge	
  of	
  
                                                           your	
  debts.	
  
                                                    	
  
WHEN IS CHAPTER 7                                   WHAT HAPPENS TO THE DEBTS?
PREFERRED?                                          	
  
	
                                                  •      In	
  most	
  cases,	
  your	
  unsecured	
  debt	
  (e.g.,	
  credit	
  
•      Most	
  if	
  not	
  all	
  of	
  your	
            cards,	
  medical	
  bills,	
  signature	
  and	
  personal	
  loans,	
  
       debts	
  are	
  unsecured.	
  	
  	
                vehicle	
  repo	
  or	
  home	
  foreclosure	
  deficiencies)	
  will	
  
                                                           be	
  discharged.	
  	
  Student	
  Loans	
  will	
  most	
  likely	
  not	
  
•      You	
  are	
  current	
  on	
  the	
  
                                                           be	
  discharged,	
  though.	
  
       secured	
  debts	
  you	
  
       want	
  to	
  keep,	
  or	
  you	
           •      Most	
  priority	
  debts	
  like	
  income	
  taxes	
  and	
  domestic	
  
       wish	
  to	
  surrender	
  the	
                    support	
  obligations	
  survive	
  the	
  discharge,	
  meaning	
  
       secured	
  collateral	
                             that	
  you	
  will	
  continue	
  to	
  owe	
  them	
  after	
  you	
  
       back	
  to	
  the	
  creditor.	
                    receive	
  your	
  discharge.	
  	
  	
  
•      Your	
  assets	
  are	
  fully	
             •      You	
  usually	
  can	
  choose	
  whether	
  and	
  how	
  you	
  want	
  
       protected	
  by	
  state	
                          to	
  keep	
  your	
  secured	
  debts	
  (e.g.,	
  vehicle	
  with	
  a	
  
       exemptions.	
  	
                                   loan,	
  home	
  with	
  a	
  mortgage)	
  	
  
                                                    •      You	
  may	
  choose	
  to	
  surrender	
  a	
  secured	
  asset	
  
                                                           without	
  owing	
  a	
  deficiency	
  that	
  arises	
  when	
  your	
  
                                                           creditor	
  resells	
  it.	
  	
  
                                                    	
  
                                            CHAPTER 13 BANKRUPTCY



                                                              HOW IT WORKS
       Chapter	
  13	
                                        	
  
       bankruptcy	
  is	
  called	
                           •      Chapter	
  13	
  is	
  a	
  3	
  to	
  5	
  year	
  repayment	
  plan	
  that	
  
       Adjustment	
  of	
  Debts	
                                   consolidates	
  your	
  debts	
  into	
  a	
  manageable	
  
       of	
  An	
  Individual	
                                      payment.	
  	
  	
  	
  
       with	
  Regular	
                                      •      You	
  make	
  regular	
  payments	
  to	
  the	
  Chapter	
  13	
  
       Income.	
                                                     Trustee,	
  who	
  in	
  turn	
  sends	
  the	
  money	
  to	
  your	
  
                                                                     creditors	
  according	
  to	
  the	
  plan	
  that	
  you	
  have	
  put	
  
                                                                     together	
  and	
  that	
  the	
  court	
  and	
  creditors	
  confirm.	
  	
  	
  
                                                              •      The	
  amount	
  of	
  money	
  that	
  you	
  repay	
  your	
  
	
  
                                                                     creditors	
  is	
  based	
  upon	
  your	
  monthly	
  income	
  and	
  
	
  
                                                                     expenses,	
  as	
  well	
  as	
  your	
  assets.	
  	
  	
  
       WHEN IS CHAPTER 13                                     	
  
                                                              WHAT HAPPENS TO THE DEBTS?
       PREFERRED?                                             	
  
       	
                                                     •      In	
  most	
  cases,	
  you	
  will	
  repay	
  a	
  certain	
  percentage	
  
       •      You	
  are	
  facing	
                                 of	
  your	
  unsecured	
  debt	
  and	
  all	
  of	
  your	
  secured	
  
              foreclosure	
  on	
  your	
                            debts	
  (excluding	
  long-­‐term	
  debts	
  like	
  
              home	
  or	
  repossession	
                           mortgages).	
  	
  When	
  you	
  finish	
  your	
  plan,	
  usually	
  all	
  
              of	
  your	
  car.	
                                   you	
  will	
  owe	
  will	
  be	
  your	
  continuing	
  mortgage.	
  
       •      You	
  have	
  assets	
  that	
                 •      You	
  can	
  potentially	
  lower	
  your	
  interest	
  rate	
  and	
  
              are	
  not	
  protected	
  by	
                        monthly	
  payment	
  on	
  your	
  car	
  and	
  other	
  secured	
  
              state	
  exemptions	
  that	
                          debts	
  
              you	
  do	
  not	
  want	
  to	
  
                                                              •      Your	
  plan	
  will	
  most	
  likely	
  pay	
  back	
  any	
  IRS	
  tax	
  debt	
  
              lose,	
  like	
  a	
  home	
  with	
  
                                                                     or	
  domestic	
  support	
  obligations	
  that	
  you	
  owe.	
  	
  	
  
              significant	
  equity	
  or	
  a	
  
              vehicle	
  with	
  no	
  lien.	
                	
  
       •      You	
  have	
  significant	
  
              tax	
  debt	
  that	
  you	
  want	
     	
  
              to	
  repay	
  in	
  a	
  finite	
       	
  
              time	
  without	
  further	
             	
  
              penalties	
  and	
  interest.	
          	
  
                                                       	
  
3                        Got a question about your situation or something you read in this guide?
                           Feel free to email me at bkguide@llgtn.com, call me at 615-807-1064,
                                           or visit the website at www.llgtn.com.
                                                           ABOUT THE AUTHOR


	
  

                                                            GORDON BOUTWELL is	
   a	
   bankruptcy	
   and	
   consumer	
  
                                                            protection	
   attorney	
   in	
   Franklin,	
   Tennessee.	
   	
   He	
   has	
  
                                                            practiced	
   law	
   since	
   2006,	
   with	
   most	
   of	
   that	
   time	
  
                                                            dedicated	
   to	
   bankruptcy,	
   personal	
   finance,	
   and	
  
                                                            consumer	
  advocacy.	
  	
  	
  
                                                            	
  
                                                            Over	
  the	
  years	
  he	
  has	
  helped	
  hundreds	
  of	
  individuals,	
  
                                                            couples,	
  and	
  families	
  with	
  their	
  financial	
  problems.	
  	
  He	
  
                                                            believes	
   in	
   treating	
   other	
   people	
   the	
   way	
   he	
   would	
  
                                                            want	
   to	
   be	
   treated	
   in	
   the	
   same	
   situation.	
   	
   He	
   takes	
  the	
  
                                                            time	
  to	
  get	
  to	
  know	
  his	
  clients,	
  and	
  he	
  educates	
  them	
  
                                                            on	
  their	
  options	
  for	
  getting	
  out	
  of	
  debt,	
  helping	
  them	
  to	
  
                                                            understand	
  and	
  evaluate	
  them.	
  	
  	
  	
  	
  
                                                            	
  
                                                            He	
   believes	
   bankruptcy	
   is	
   a	
   worthwhile	
   tool	
   to	
   help	
  
	
                                                          some	
   (but	
   not	
   all)	
   people	
   get	
   out	
   of	
   debt,	
   and,	
   when	
  
	
                                                          combined	
  with	
  financial	
  education	
  and	
  counseling,	
  can	
  
	
                                                          be	
  a	
  springboard	
  to	
  financial	
  independence.	
  	
  	
  
                                                    	
      	
  
       Gordon	
  H.	
  Boutwell,	
  Atty	
                  In	
   March	
   2011,	
   Gordon	
   and	
   R.	
   Keith	
   Gordon	
   formed	
  
       Lodestone	
  Legal	
  Group	
                	
  
                                                    	
      the	
   Lodestone	
   Legal	
   Group	
   in	
   Franklin	
   Tennessee,	
  
       198	
  E.	
  Main	
  St.,	
  Ste.	
  4	
  
       Franklin,	
  TN	
  37064	
                   	
      with	
   the	
   purpose	
   of	
   assisting	
   business	
   and	
   private	
  
       615-­‐807-­‐1064	
                           	
      clients	
  by	
  exploring	
  legal	
  options,	
  navigating	
  the	
  legal	
  
       bkguide@llgtn.com	
                          	
      pitfalls,	
   and	
   providing	
   measurable	
   results	
   through	
  
       www.llgtn.com	
                              	
      custom	
  solutions	
  and	
  a	
  commitment	
  to	
  the	
  lost	
  art	
  of	
  
                                                    	
      personal	
  care	
  and	
  client	
  service.	
  
                                                            	
  
                                                            Lodestone	
   Legal	
   Group	
   practices	
   in	
   the	
   areas	
   of	
  
                                                            bankruptcy,	
  debt	
  negotiation	
  and	
  settlement,	
  financial	
  
                                                            counseling,	
   residential	
   and	
   commercial	
   real	
   estate,	
  
                                                            estate	
   planning	
   (wills	
   and	
  trusts),	
   and	
  small	
   business	
  
                                                            and	
  corporate	
  law.	
  	
  	
  
                                                            	
  
                                                            	
  
                                                            	
  
                                                            	
  	
  	
  	
  	
  	
  
4                         Got a question about your situation or something you read in this guide?
                            Feel free to email me at bkguide@llgtn.com, call me at 615-807-1064,
                                            or visit the website at www.llgtn.com.

								
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