Law Office of Rick Morin, PC

When thinking about bankruptcy, most folks think of Chapter 7 Bankruptcy. Chapter 7 provides a “fresh start” by wiping out unsecured debt. The process takes about 3-4 months. For most people, the Chapter 7 bankruptcy process is relatively painless.

However, because of how the bankruptcy code is written, not everyone will qualify for Chapter 7 bankruptcy.

As an initial matter, a lot of people call my office worried that they don’t qualify for Chapter 7. As it turns out, most of them end up qualifying. If you have questions about your eligibility for bankruptcy, it is important that you talk to an attorney.

There are many reasons why Chapter 7 bankruptcy might not be the right fit. Typical hurdles include business ownership, too much equity in a home, or too much household income.

While there are ways of getting around common disqualifying factors, sometimes Chapter 7 just won’t work. In that case, a person in need of bankruptcy assistance should consider Chapter 13 bankruptcy.

Chapter 13 bankruptcy is considered a “reorganization.” It allows a debtor an opportunity to reorganize his or her finances over the course of 3-5 years. During that time, the debtor makes a monthly payment to the Bankruptcy Trustee. The Trustee uses the monthly payment to repay a portion of the debt. Any debt not paid off after the 3-5 year period is discharged.

Chapter 13 bankruptcy has some positive features not found in Chapter 7 bankruptcy. In Chapter 13, you can strip certain liens off of a house. That means that you can eliminate a second mortgage in Chapter 13 bankruptcy. You can’t do that in Chapter 7. Also, certain debts that can’t be discharged in Chapter 7 can be discharged in a Chapter 13.

Chapter 13 is much more complex than Chapter 7. Done correctly, it can provide just as much benefit to a debtor as Chapter 7. It is especially useful for people that don’t qualify for Chapter 7.

Bankruptcy in any form is an important decision. Please call me at (916) 333-2222 to discuss your bankruptcy options. Don’t delay any longer.