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Filing a personal bankruptcy is one of the most significant financial decisions you will make in your life. There are a multitude of factors to consider. Sometimes a bankruptcy causes more harm than good. That's why you need experienced bankruptcy counsel who take the time to learn about you, assess your financial circumstances, and explain in simple terms whether and how a bankruptcy filing can help you.     

Get Rid of Debt. The bankruptcy discharge forever eliminates your unsecured debts, including credit cards, medical bills, and personal loans. It gives you a fresh start and allows you to move forward unhindered by old debts.  

Stop Collections. A bankruptcy filing imposes an automatic stay, which immediately stops all collections, levies, and garnishments against you and your property while the bankruptcy case remains pending. Upon receiving a discharge, creditors are forever stopped from attempting to collect discharged debts against you or your property.

Protect Your Home and Retirement. Most debtors are able to protect all of their property from bankruptcy administration with smart use of state and federal exemption statutes. This lets you keep your property while discharging your debts.

Avoid Judgment Liens.  Judgment liens can attach to your real and personal property and threaten your continued ownership. In bankruptcy, debtors can avoid judgment liens against their property to the extent the liens impair their exemptions.  

Reestablish Credit. A bankruptcy filing remains on your credit report for up to 10 years. However, a bankruptcy filing may actually improve your credit score by discharging your unsecured debt and removing those derogatory comments from your credit report. 

The Different Chapters

 

We represent individual debtors in bankruptcy cases administered under Chapters 7, 11, and 13 of the Bankruptcy Code. These chapters differ vastly, as do our legal services in each type of case. During our free initial consultation, we will discuss which type of bankruptcy case will best serve your needs. 

Chapter 7.  In chapter 7, your valuable property will be liquidated by a chapter 7 trustee for the benefit of unsecured creditors. Most debtors can use exemptions to protect all of their property from bankruptcy administration, meaning these debtors retain all of their property after the bankruptcy case. This is the cheapest and quickest chapter with most cases concluding in 4 to 6 months. However, it is not available to everyone. Chapter 7 bankruptcy is usually only available to those who pass the means test--who are (i) those with primarily consumer debts and earn less than the median income, or (ii) those with primarily business debts. Chapter 7 is ideal for those who pass the means test and do not want to try reorganizing.      

Chapter 11. In chapter 11, you remain in control of your property and propose a plan to reorganize or liquidate your bankruptcy estate. You owe fiduciary duties to your creditors and must propose a plan that is in their best interests. The plan must be voted on by creditors and confirmed by the bankruptcy court. This is labor intensive and increases the cost of chapter 11 cases. However, chapter 11 debtors have considerable latitude in proposing repayment terms and powerful tools to assist their reorganization, including the ability to strip off liens and restructure long-term debt obligations (including mortgages and car loans). The length of any chapter 11 case depends upon the terms of your confirmed plan.  Chapter 11 debtors receive their bankruptcy discharge upon completion (or substantial consummation) of the confirmed plan. Chapter 11 is ideal for high-net worth individuals (and businesses) who want to retain their property, avoid liens, or restructure their long-term debt obligations.   

Chapter 13. In chapter 13, you remain in control of your property and propose a plan of reorganization. In a lot of ways, a chapter 13 case resembles an abbreviated and simplified chapter 11 case. Chapter 13 is tailored for and limited to individual debtors with less than $394,725 in unsecured debt and less than $1,184,200 in secured debt. Chapter 13 plans are usually proposed and confirmed with court forms, which significantly reduces the cost of chapter 13 cases in comparison to chapter 11 cases. Chapter 13 debtors have many of the same powers as chapter 11 debtors but must propose a plan that contributes all of their disposable income to the plan for 3 or 5 years. Plan payments are made to a chapter 13 trustee who then makes distributions to creditors according to the plan's terms. Chapter 13 debtors receive their bankruptcy discharge upon completing all plan payments. Chapter 13 is best suited for individuals who do not pass the chapter 7 means test and have relatively simple reorganization needs. It allows people to cure payment arrears, strip off junior liens on real property and personal property, and restructure long-term debt obligations.

Below is a summary of the key differences between Chapters 7, 11, and 13. There are exceptions to every rule, so please ask us if you are interested in learning more about a particular topic.

Type of Administration

Eligibility Limitations

Duration

Bankruptcy Trustee

Repayment Plan

Monthly Reporting Requirements

Discharge

Upon Plan Completion

Lien Avoidance

Loan Modification (Except Home Mortgage)

Chapter 7

Liquidation

Yes - Income Limits

4 to 6 months

Yes

No

No

Yes

No

Limited

No

Chapter 11

Depends on Plan

No

Depends on Plan

No

Yes

Yes

Yes

Yes

Yes

Yes

Chapter 13

Reorganization

Yes - Debt Limits

3 to 5 years

Yes

Yes

No

Yes

Yes

Yes

Yes

Ready to Talk?

Send us a message to schedule your

free consultation with a bankruptcy attorney.

Address

3615 Main Street, Suite 103

Riverside, CA 92501

Email

don@donreidlaw.com

 

Phone

951-777-2460

 

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Donald W. Reid is a bankruptcy attorney licensed to practice in California, and his principal office is located in Riverside, California. The information provided on this website is offered for informational purposes only. It is not offered as legal advice and does not constitute legal advice. The Law Office of Donald W. Reid Reid does not seek to represent you based solely on your visit to this website or your use of the form above. This website may be considered advertising under the rules of California. You should not make legal hiring decisions based solely on brochures, advertising, or other promotional materials.

© Copyright 2019, Law Office of Donald W. Reid.  3615 Main Street., Suite 103, Riverside, CA 92501