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Chapter 7 and Chapter 13 Bankruptcy. How, What, and When, Answered
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 email@example.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 firstname.lastname@example.org, 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 email@example.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 firstname.lastname@example.org, call me at 615-807-1064, or visit the website at www.llgtn.com.
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