Consumer Bankruptcy

Making a decision to file bankruptcy is never easy but if you are burdened by debt that seems impossible to overcome, it may be an option. Oftentimes, job loss, reduction in working hours, illness and divorce can result in financial difficulties. Consumers who are working hard to get their financial lives back on track often turn to the bankruptcy laws which are designed to protect assets such as your home and automobile while allowing you to get out from under crippling debt. There are two primary types of bankruptcy that most consumers are eligible to use and it is important to understand the difference between the two.

Chapter 7 Bankruptcy: What It Is and What It Does

Chapter 7 bankruptcy requires consumers to pass a “means” test. This means that your income and expenses will be reviewed and certain questions will be answered in order to determine if you are eligible for the protections offered.  If you are eligible for Chapter 7 filing, you will also have to attend a consumer credit counseling course prior to the discharge of your bankruptcy. Any debts you owe that are considered unsecured consumer debt such as credit card debt, medical bills, etc. will be eliminated upon discharge. Typically, child support, student loans and tax payments are not eligible for discharge.

Chapter 13 Bankruptcy: What It Is and What It Does

Chapter 13 is often called “wage earners bankruptcy”. Consumers who are unable to pass the means test requirements of Chapter 7 may opt for protections under this section of the bankruptcy code. Consumers will have to work with their consumer bankruptcy attorney to prepare a repayment plan that lasts between three and five years which basically restructures their existing debt as well as arrears on mortgage payments, child support payments, etc. The bankruptcy court will have to approve the plan and consumers are still required to take a credit counseling course. Once the payments are completed per the terms of the repayment plan, the bankruptcy is discharged.

Your current financial situation will determine which chapter of the bankruptcy laws will work best for your specific circumstances. If you are feeling overwhelmed by your debts, contact the Law Office of Charles W. Campbell at 610-272-2400 for a consultation. Our office has been serving consumers in the Southeastern Pennsylvania area since 1982 and we will be happy to help you determine which chapter of the bankruptcy laws will be most beneficial.

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