Bankruptcy is a tool that individuals can use to help alleviate their financial situation. However, what chapter of bankruptcy you file (Chapter 7, 13, or 11) depends on the types of debts you owe and whether you want to repay your debts or be discharged from them completely. There are certain criteria you must meet before you are able to discharge your debts completely under a Chapter 7.
   Chapter 7
Chapter 7 of the Bankruptcy Code allows you a full discharge of certain debts so that you do not have to pay the debts back. Examples of these debts are credit card charges, medical bills, and deficiencies from repossessed or surrendered items. There are some debts that are not allowed to be discharged such as certain taxes, student loans, child support payments and debts owed due to judgments involving DUIs.

In order to file under Chapter 7, a debtor must meet the Means Test. Basically, your income must be at or below the median income for the number of individuals in your family that the IRS has established. If it is over this amount, you are presumed to be abusing the system and must then measure your expenses against the median expenses allowed by the IRS. If your expenses exceed this amount, the Trustee may move for a Motion to Dismiss and/or Convert your case to a Chapter 13 where you will be required to repay your debts.

If you are able to file under Chapter 7, be advised that the Chapter 7 Trustee's job is to look at your assets to determine which assets are non-exempt. This means that the Trustee can seize the assets and sell them to pay your creditors. Items that are normally non-exempt include property that is not your homestead, boats, vehicles if you have more than one.

It is imperative that you speak with an attorney as soon as possible to determine whether you qualify for a Chapter 7 bankruptcy under the Means Test and to determine what assets are non-exempt and subject to seizure.

   Chapter 13
Chapter 13 of the Bankruptcy Code is designed to repay your debts. If you are behind in your mortgage payments or vehicle payments and want to keep them, you most likely want to file a Chapter 13. The payments you are behind will be included in the monthly plan payment you make to the Chapter 13 Trustee and you will continue to make your regular installment payments according to your contract. The plan payments can last from 36 to 60 months depending on the amount of your debt and the amount of income you can contribute to the plan.

   Chapter 11
Chapter 11 of the Bankruptcy Code is to help businesses reorganize their debt and stay in business. These plans can last as long as needed to keep the business going. There is no guarantee that a court will allow a business to stay in a Chapter 11 plan and there is no set amount to be paid. The plan is usually determined by the debtor and must be approved by the creditors and the court. If the court determines the plan is not feasible, it can convert the bankruptcy to a Chapter 7 and liquidate the business.

Filing for bankruptcy is very complicated and it is highly recommended that you hire an attorney to help you through the process in order to protect your assets to the full extent possible. Not every attorney is admitted to practice in Bankruptcy court. We are and we are ready to discuss your specific situation. Please call us at 813-645-8787 to discuss your rights.

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