The Bisom Law Group

You should consider filing for bankruptcy when you are not able to pay the minimum balance on your credit cards. When you are unable to modify your mortgage and your house may be sold in a foreclosure. When you are recently divorced and alimony or child support doesn’t leave you enough after paying your credit card debt. When you have more than one loan secured by your home (for example: 80/20 loans or an equity line), but your house is worth a lot less now. You are withdrawing from your retirement savings to pay your bills. You owe the IRS more than you are able to pay. Your wages are being garnished. Creditors are filing lawsuits against you. Your home is in foreclosure.

A bankruptcy case normally begins by the debtor filing a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity. The debtor is also required to file statements listing assets, income, liabilities, and the names and addresses of all creditors and how much they are owed. The filing of the petition automatically prevents, or "stays," debt collection actions against the debtor and the debtor's property. As long as the stay remains in effect, creditors cannot bring or continue lawsuits, make wage garnishments or other collection efforts including making telephone calls demanding payment.

Creditors receive notice from the clerk of court that the debtor has filed a bankruptcy petition. Some bankruptcy cases are filed to allow a debtor to reorganize and establish a plan to repay creditors, while other cases involve liquidation of the debtor's property. In many bankruptcy cases involving liquidation of the property of individual consumers, there is little or no money available from the debtor's estate to pay creditors. As a result, in these cases there are few issues or disputes, and the debtor is normally granted a "discharge" of most debts without objection. This means that the debtor will no longer be personally liable for repaying the debts.

Once the bankruptcy is filed, there is a "stay" on all collection actions by creditors. They are no longer allowed to contact you or attempt to collect any of the money owed. The automatic stay also stops foreclosure proceedings, wage garnishments and bank levies.

A fundamental goal of bankruptcy laws is to give debtors a financial "fresh start" from their debts. This goal is accomplished through the bankruptcy discharge, which releases debtors from personal liability for specific debts and prohibits creditors from taking any action against the debtor to collect those debts.

If your case is a Chapter 7 bankruptcy, your debts will be discharged and with certain exceptions, you will no longer owe on your outstanding debts. You will receive a fresh start.

If your case is a Chapter 13, you will make payments pursuant to your chapter 13 plan. in an amount that you can afford. When you have completed your plan payments, the Court will issue an order discharging the balance of the debt not paid through the plan.

Chapter 7, also known as a liquidation, assures an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor, reduces them to cash, and makes distributions to creditors. The debtor has a right to retain certain exempt property. Because there is usually no nonexempt property in chapter 7 cases, there may not be an actual liquidation of the debtor's assets. These cases are called "no-asset cases." A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case. In most chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The discharge occurs a few months after the filing of the petition.

Chapter 11, is a reorganization, and is ordinarily used by businesses that desire to continue their operations and repay creditors through a plan of reorganization. The chapter 11 debtor files a plan of reorganization and must provide creditors with a disclosure statement containing information adequate to enable them to evaluate the plan. The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations so as to return to profitability. Under chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.

Chapter 13, is is designed for a individual debtors who have regular income. Chapter 13 is often preferable to chapter 7 because it enables the debtor to keep its assets, and because it allows the debtor to propose a "plan" to repay creditors over time – usually three to five years. Chapter 13 is also used by consumer debtors who do not qualify for chapter 7 relief under the means test. At a confirmation hearing, the court either approves or disapproves the debtor's repayment plan, depending on whether it meets the Bankruptcy Code's requirements for confirmation. Chapter 13 is very different from chapter 7 since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, with the trustee as the disbursing agent, based on the debtor's anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. Payments under the plan must be completed before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Typically not. Most of the time, your credit score recovers after you receive your bankruptcy discharge because most of your debt has been discharged.

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Andrew S. Bisom Business and Personal Bankruptcy Attorney

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Frequently Asked Questions About Bankruptcy

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Andrew S. Bisom Business and Personal Bankruptcy Attorney

Superior Bankruptcy Attorney

Why Choose Us?

Frequently Asked Questions About Bankruptcy

Who should consider filing for bankruptcy?

What is bankruptcy?

What happens after my bankruptcy case is filed?

What are the three main types of bankruptcy cases?

Will bankruptcy ruin my credit?

Client Testimonials

Free Case Evaluation