Hi, I’m attorney Kevin Williams and I’d like to answer the question What is a
Bankruptcy?
Well, simply put, a bankruptcy is a legal process by which debts are liquidated,
re-organized or forgiven, or a combination of the three. Bankruptcy in its current
form comes from the days of the Great Depression and allows people with large
debts and no way of satisfying them with a means to recover and get a fresh start.
There are two different options for most consumers, and they’re named after their
sections of the bankruptcy code.
Chapter 13 is called a reorganization or “partial repayment plan.” This plan lets
you catch up your payments on things like your house and your car and prevents
foreclosures and repossessions, but will create a repayment plan so that over
time, your debts are partially repaid through monthly installment payments. Your
payment plan will continue for between three to five years and, at the conclusion
of the plan, any amounts still outstanding are discharged. As an added benefit,
debts and interest rates on things like cars are frequently reduced so that your
payment is reduced, too.
Chapter 7 is commonly called a liquidation. That sounds a little scary, so I prefer
to call it a “no repayment plan.” This plan eliminates your debts entirely except
those you decide to keep – like maybe your house and possibly your car. You
can’t file for a “no repayment plan” if you make a lot of money or if you’re behind
on your house or car – and want to keep them – or if you have a lot of assets that
the bankruptcy code does not protect. But for the vast majority of middle-class
people – people like you and me – this is the best choice – and it’s fairly painless,
too, since you generally don’t have to repay debts that you don’t want to repay.
Want to get rid of that car payment? Yup, we can do that. House underwater?
Yup, we can get that monkey off your back, too. $300 dollar a month cell phone
bill? Gone.
So to recap: Chapter 13 creates a repayment plan for three to five years at the end
of which the balance of debt is forgiven, and a Chapter 7 discharges all the debts
right at the start. We’ll help you pick the one that’s right or help you through the
non-bankruptcy debt relief that’s best for you.
Our firm has extensive experience in assisting people just like you with a
customized, personal, goal-based approach to bankruptcy, debt relief and other
financial improvement tools. If you’re in Middle Tennessee, please call me today
at 615-264-8249 for a no-charge consultation to answer any questions you might
have.
