Chapter 7 bankruptcy is often referred to as "liquidation bankruptcy." You can protect $3,000.00 in equity in vehicles ($6,000.00 for married filers) and $6,000.00 if you are disabled or retired, $3,000.00 in household goods (again, $6,000.00 for married filers), and $45,000.00 of equity in a primary residence. The Court allows for pre-bankrupt planning, so if there is a problem, it can be addressed before the bankruptcy is filed.

Generally, all unsecured debts are discharged in a Chapter 7 bankruptcy. This includes medical bills, credit card debts, bank loans, deficiency judgments, phone bills, returned checks, etc., though there may be exceptions. Taxes may also be discharged under certain circumstances. Some items that will not be discharged are: child support, alimony, student loans, court fines and criminal restitution, as well as some personal injury judgments where fraud or other issues may be involved. Generally, if you continue to make your payments on secured items, you will be allowed to keep the items..

Chapter 13 bankruptcy is known as the "wage earner plan." You are entitled to the same exemptions in a Chapter 13 bankruptcy as in a Chapter 7 bankruptcy. In addition, you are able to keep non-exempt property in a Chapter 13 that may be liquidated in a Chapter 7. In a Chapter 13 bankruptcy, you make monthly payments to a trustee, who then distributes the funds to your creditors. Chapter 13 plans range from 36 to 60 months, depending on the purpose of the filing. Chapter 13 bankruptcies are filed for several reasons, including:  to save a home from foreclosure, to pay for debts that are not dischargeable in a Chapter 7, or because the debtor is not eligible for a Chapter 7 but would benefit from Chapter 13 relief. Our attorneys can help you make the decision that is best for your unique situation.

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