If you are struggling with debt, then you may want to consider bankruptcy as a method of resolving these unpaid bills. Even though bankruptcy is typically met with a significant amount of opposition, it actually can help consumers more than they may think.

There are two bankruptcy options available for consumers: Chapter 7 and Chapter 13. Each method has different requirements of their debtors. Chapter 7 is called liquidation bankruptcy because filers sell off non-exempt assets in order to make money for paying off their debts. Chapter 13, on the other hand, is also known as reorganization bankruptcy because filers restructure their payments plans to have more easily met monthly payments.

Chapter 7 Bankruptcy

Chapter 7, or liquidation, bankruptcy is the most common form of consumer bankruptcy in the United States. Under this type of filing, the debtor will have many of his or her debts discharged and will pay off the remaining money owed through property liquidation. Even though most debts are eliminated through this discharge, student loans, taxes, child support, government fine and court fees must still be paid in full.

The debtor will also have to divide his or her assets into exempt and non-exempt items, and non-exempt items will likely be sold. The money gained from these sales will go toward paying off any remaining debt.

In order to qualify for Chapter 7 bankruptcy, one must meet the terms set by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. To successfully file Chapter 7, one must pass the means test, which proves that he or she does not have the earnings to reorganize the debt and pay it off that way.

Chapter 13 Bankruptcy

Chapter 13, or reorganization, bankruptcy allows debtors to restructure their financial payments under the protection and supervision of the US Court system. Typically, the plan extends the repayment period to three or five years. The amount owed each month for secured debts is reduced, but the total amount must be paid in full. Unsecured debts, however, may be reduced or eliminated completely.

Chapter 13 bankruptcy also protects filers from foreclosure if they are in danger of losing their homes. It also halts repossession and creditor harassment.

Contact Us

If you are currently struggling with financial difficulties and think that bankruptcy may be the best option for you, then the Arizona bankruptcy lawyers of the Harmon Law Office, LLC can help. To learn more about their legal services, visit http://www.harmonlegal.net/ today.

Joseph Devine