There are two main types of bankruptcy for consumers, which are Chapter 7 and Chapter 13. Here are the differences:
- Chapter 7 – This type of bankruptcy will clear all of your unsecured debt. Once you receive your Notice of Discharge from the U.S. Bankruptcy Court in your state, all of your debts will be wiped out. A Chapter 7 bankruptcy can free you from unsecured debt (such as credit cards, medical bills, utility bills and payday loans for a few examples). The discharge process can go through pretty quickly, getting it all over within a few short months.
- Chapter 13 – This type of bankruptcy is a little bit different. Basically, instead of discharging you from all of your debt, you will have a payment schedule set up with the U.S. Bankruptcy Court to pay it back. A Chapter 13 bankruptcy was basically designed to stop these things: wage garnishments, foreclosures, repossessions and lawsuits. You will have a single payment made to the court instead of dealing with multiple creditors.
Every situation is unique and that’s why is essential to talk to an attorney who specializes in bankruptcies before making a decision. Keep in mind that there are a few things that might not be able to be included in your bankruptcy, such as:
- Student loans
- Taxes
- Debts relating to personal injuries, or worse, caused by driving while intoxicated
- Child support
- Alimony
- Recent credit purchases
- Fines
- Debts incurred through a fraudulent act
Here are some myths about filing for bankruptcy:
- Everyone will know – This isn’t true. The only way for someone to find out about it is if they go to the U.S. Bankruptcy Court and pull the information. Also, keep in mind that with the way the economy has been, there have been many people filing for bankruptcy. It’s nothing to be ashamed of.
- You will lose everything – You will not lose everything. In fact, bankruptcy laws were put into place to protect you.
- It’s difficult to file a bankruptcy – This isn’t true, and in fact, a bankruptcy is easy to file when you have the right attorney to help you through it.
Filing for bankruptcy can be emotional. We can help. Don’t hesitate to give me a call so we can discuss your options, or setup an appointment at any of our consumer law offices. We have offices conveniently located in Seattle, Portland, Vancouver and Salem. I can help you get that much needed fresh start.
