Helping Missouri Residents Obtain a Fresh Start through Bankruptcy
People fall behind on their bills for various reasons, many of which are due to no fault of their own. Perhaps you got laid off or were involved in a serious accident that resulted in injuries that are preventing you from working. Maybe you simply overutilized your credit lines and have found yourself unable to get ahead because of unreasonably high interest rates. Whatever the reason, bankruptcy may provide a way out of the seemingly endless cycle of debt and provide you with a fresh financial start.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, often referred to as a “liquidation bankruptcy,” is the most common form of consumer bankruptcy and is utilized by hundreds of thousands of people every year. In this type of bankruptcy, if a debtor’s non-exempt assets are sold and the proceeds of the liquidation are used to pay off debts. Most debts that are leftover are discharged, which means that the debtor is no longer under any legal obligation to pay them back. Some of the types of debts that are commonly eliminated in Chapter 7 bankruptcy include the following:
• Credit card bills
• Past-due rent
• Utility bills
• Medical debts
• Some tax debts
• Business debts
• Personal loans
In order to be able to file for Chapter 7, you need to pass the “means test,” which compares your monthly income to your debt load. Fortunately, even if you are unable to file for Chapter 7, Chapter 13 may be an option.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is referred to as a “reorganization bankruptcy” and differs in many important ways from Chapter 7. In Chapter 13, your debts are reorganized and you enter into a court-approved payment plan that will last anywhere from 3 to 5 years. Your payments are made to a bankruptcy trustee who then distributed money among your creditors. Upon the conclusion of your plan, eligible debts will be discharged.
One of the main benefits of Chapter 13 bankruptcy is that it allows you to keep your property while you are “in” bankruptcy (the duration of your payment plan). For example, if you are facing foreclosure because you have fallen behind on your mortgage, filing for Chapter 13 will stop any foreclosure proceedings that have been initiated and give you an opportunity to cure your default.
Importantly, you will still need to make your regular mortgage payment to your lender under a Chapter 13 plan. This is because only the amount of your mortgage arrears is wrapped up into the payment plan, not the entire amount of the mortgage. As a result, if you plan to pursue this tactic to save you home, you need to make sure that you can keep up with your regular payment after your payment plan is put into place.
Call a Missouri Bankruptcy Lawyer Today for More Information
If you are experiencing difficulty paying your bills each month, you should discuss your situation with a lawyer as soon as possible. Attorney Kenneth P. Carp is a skilled Missouri bankruptcy attorney who has the experience necessary to help determine whether you could benefit from filing for bankruptcy or if you have other options available. For a free analysis of your financial situation, call the Law Offices of Kenneth P. Carp today at 636-947-3600 or contact us online.