Before filing for bankruptcy, it is crucial to understand all the facts. Since you may not be an expert in bankruptcy law, the questions you might have about the process have answers that are anything but clear. Not only are there different types of bankruptcy, Chapter 7 and Chapter 13, but there are also significant differences between the two.

?

One of the most common questions about Chapter 13 bankruptcy is what happens if your financial situation changes during the duration of the plan? After all, a Chapter 13 plan typically runs between three to five years and there are a lot of things that can happen in that period of time. What happens if you or your spouse lose a job, get sick or in an accident and incur medical expenses, or have a change in family size?

?

Fortunately, Chapter 13 bankruptcy offers a great deal of flexibility in the event of a change of income or expenses during the duration of the plan. Many times the court can agree to modify your plan to make it work. This often involves a lowering of monthly payments which debtors are obligated to pay.

?

Other times, the changes may need to be made even before a first payment is sent. Sometimes debtors are still unable to pay their mortgage even with the restructuring of their debt in Chapter 13. In cases like this, a modification is necessary. If the situation that you are experiencing is only a short-term problem, the court may grant a moratorium in payments if it will allow you an opportunity to recover from an illness, one-time expense, or some other temporary cash flow problem.

?

If your situation changes significantly for the worse, Chapter 13 has what is called a “hardship discharge”. This happens when a Chapter 13 plan is confirmed but circumstances come up that prevent the debtor from completing the plan. However, there are stipulations to a hardship discharge which make it available only if: the failure to pay comes from circumstances beyond the debtor’s control, creditors have received at least as much money as they would have received under Chapter 7 where assets are liquidated, and if modification of the plan is impossible.

?

Bankruptcy can be complicated, which is why you need an attorney who can get things right the first time. A lawyer who works exclusively on bankruptcy and keeps up with the newest trends in the industry can put that knowledge to work for you. Let’s face it, unemployment, garnishments, and repossessions can happen to anyone. When filing for bankruptcy in North Carolina, the attorneys at The Law Offices of John T Orcutt know what they are doing because bankruptcy is all they do and have a proven track record in succeeding. Call 1-800-899-1414 for a free consultation.

Filing bankruptcy is the last draw if you can’t find any other solution to your financial and debt problems. This serious step keeps you protected from your creditors but you have to go through a lot of trouble for the proceedings. Federal bankruptcy law oversees the procedure, however, recent changes to the law have made filing bankruptcy more difficult.

The first thing bankruptcy law requires is that you contact a bankruptcy lawyer. A bankruptcy lawyer can be found through local and state bar associations (for referrals) or you can ask around for an attorney you can trust to do a good job. The next step is to collect all your financial papers and bring them to your bankruptcy lawyer’s office. Don’t forget to bring outstanding bills, bank statements, and paycheck stubs from the last six months, mortgage and car loan information, as well as tax returns.

All the paperwork that your bankruptcy lawyer will put together when filing bankruptcy is called a petition. The petition, according to bankruptcy law, must list every debt you currently owe. In the case that you purposefully leave out creditors, the court has the right to dismiss your case entirely, and you won’t be given a chance to file for bankruptcy at all. This is a federal crime under bankruptcy law as well – never lie when filing bankruptcy.

Talk to your bankruptcy attorney about all the debts you have, both secured and unsecured, and ask whether or not some of your debts will still be around after bankruptcy has been filed. If they are all discharged you won’t have to pay any of them after bankruptcy proceedings. Taxes, student loans, and child support are all payments it’s extremely difficult to have discharged.

Be honest with your bankruptcy attorney about all the income you have been able to earn over the past 6 months, even if from a source other than your regular job and paycheck. This is another form of information that the law requires you include when filing for bankruptcy, so disclose all finances fully.

Find out if you should file a chapter 7 – this will depend on the type of debt you have, and the amount. A chapter 7 is also known as liquidation bankruptcy. If you don’t fit under this category, you’ll probably have to file a chapter 13 instead. A chapter 13 bankruptcy is referred to as an adjustment of debts petition. This option applies if you make a decent living and have fallen behind on secured debts, such as house payments, as this type of bankruptcy gives you a chance to catch up on the payments you owe.

Once all the paperwork has been compiled and everything has been checked over with a fine toothed comb, it’s time to sign the petition in the appropriate places as a way of stating that the information you have provided is true. Nowadays you can file a petition online, which is very convenient, with your local district. Without an attorney the process can be daunting, and you have to do it in person or through U.S. Mail.

Consumers who file chapter 7 bankruptcy MN must be eligible.

Chapter 13 of the bankruptcy code gives debtors the opportunity to repay some or all of the debts that are in their name, in better terms, lower or no interest. Debtors have the ability to use income they have in the future to pay off creditors.

How Chapter 13 Works

A time frame of 5 years is allotted for debtors to be able to pay of their creditors in full. Your attorney will safeguard your interests, while the entire process is carried out under court supervision. A new interest free plan is approved by the court, which allows debtors to repay their creditors and still retain all of their property, unlike Chapter 7 bankruptcy. A list of transactions and time duration is created for this process. Thirty to forty-five days after the case has started, payments must begin to be made.

Making Sure Chapter 13 Is The Right Choice

To qualify for Chapter 13 you must have a regular source of income. You will need to prepare a budget, fill out forms and leadings, and appear for meetings with creditors and court hearings. After all of your payments have been made in full you will be eligible to receive a discharge from your debts and the plan will be terminated. To know if Chapter 13 Bankruptcy is the right choice for your financial interests, you will first need to fill out an evaluation form as with all Chapters of Bankruptcy. Your attorney will review your form and be able to guide you towards Chapter 13 or the solution that best fits your financial situation.

Chapter 7 Bankruptcy is known as straight bankruptcy as well as liquidation (converting assets into money) and it is the most common form of bankruptcy. Most, if not all debts are discharged within months of your attorney filing a bankruptcy petition. Chapter 7 of the bankruptcy code allows debtors who are in need of discharging debts within a situation of financial emergency to become free and clear of these debts and to become able to begin a fresh new financial start.

How Chapter 7 Works

The way Chapter 7 bankruptcy works is that a trustee is assigned to collect and to sell assets and non-exempt property to distribute the proceeds from these items to pay off creditors. In Chapter 7 the debtor receives a discharge from all dischargeable debts. These debts may include child support, most taxes and student loans under the filing of chapter 7 Bankruptcy.

Making Sure Chapter 7 Is The Right Choice

To know if you are eligible or to understand if Chapter 7 bankruptcy is right for your situation you must first complete an evaluation form. This form will have questions regarding your debt and financial situation. By filling this form out completely and accurately, your attorney will be able to review your financial situation and provide you with a solid answer on if Chapter 7 bankruptcy will be the best choice to be made .If in fact Chapter 7 is found to be the right choice for your financial well being a well laid out set of rules and procedures will be provided and your attorney will be able to process your bankruptcy petition.

Debts that become out of control can be a heavy burden for any consumers.