Bankruptcy May Discharge Debts Or Allow Court Approved Debt Payments Instead

Bankruptcy Attorney Dayton, Oh


Bankruptcy is a very popular subject, but there is a lot of confusion among debtors about what bankruptcy is and how this process works. Many debtors believe that bankruptcy always discharges all debts, and that every case results in a fresh financial start. This is not necessarily true. There are several chapters of the bankruptcy code, and each covers certain situations and debt protections.




Whenever any bankruptcy petition is filed the individual, couple, or business will generally receive an automatic stay. This prevents any collection activities against the bankruptcy filer until the court can sort through the assets, debts, and other financial factors involved. The automatic stay also provides the debtor time to figure out a plan without the constant creditor harassment that can make thinking clearly very difficult.




With chapter 7 bankruptcy the debtor must pass the Means Test which is based on income. Under chapter 7 of the bankruptcy code most if not all of the debts owed are discharged, and the creditor can never attempt to collect on this debt again in the future. There are certain types of debts that can not be discharged under the current bankruptcy laws, and these include child support, alimony, and certain types of tax debts and other debt considered not eligible for discharge.




A chapter 13 bankruptcy case follows a different process. Once all of the income, assets, and debts are evaluated then a repayment plan is created. The bankruptcy court must approve this debt repayment plan, and the scheduled payments are based on income. The bankruptcy court will examine all of the income, monthly expenses, and household debts for each month. After this financial evaluation reasonable payments are set based on the individual factors in the case.




A chapter 7 bankruptcy case may be finished in 6 months, with the debt discharge becoming official at this time. A chapter 13 bankruptcy case may take several years to complete. One the debt repayment plan has been fulfilled then any remaining debt amounts owed will be discharged as long as these debts are eligible for this elimination.




Sometimes it may not be possible to file for chapter 13 bankruptcy. To be eligible to file for bankruptcy protection under this chapter the debtor must have a steady source of income and the ability to repay at least part of the debt owed. If the debtor does not qualify then usually chapter 7 bankruptcy can be filed instead.




If you are experiencing financial difficulties or you find it hard to make ends meet then bankruptcy may be able to help. The bankruptcy process can even help prevent foreclosures and repossessions in many cases. It is important to seek help from an experienced bankruptcy attorney who is also a debt specialist as soon as financial problems start. This will ensure that you get the legal advice you need and the debt assistance that you are looking for. Waiting will only make things worse and your debts will not simply go away.


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