Bankruptcy is essentially a last-ditch alternative for dealing with debt problems. Thus, the first issue to address in a consultation with a bankruptcy attorney is whether there are less drastic alternatives for your situation. Examples of these alternatives include such things as refinancing the mortgaging on your home, or going through a consumer consulting debt service. On many occasions, though, as you may have already concluded, bankruptcy is the only effective option for dealing with your problems. One you reach that point, you must determine which type of bankruptcy is best for you - Chapter 7 or Chapter 13.
Chapter 7 is the most commonly utilized form of bankruptcy, and it has the effect of wiping out most or all of your debts. Chapter 7 is particularly effective for persons with primarily unsecured debt (such as credit cards or medical bills), who have minimal assets, and relatively low income. If you have significant assets, debt that cannot be wiped out (such as most taxes), or have a good income then Chapter 7 may not be a good option for you. We would then look at Chapter 13.
Chapter 13 is a form of bankruptcy whereby you pay off some or all of your debt over time under a Court approved plan that you would prepare and submit to the Court. Chapter 13 is particularly effective for persons with a significant equity in their home but who fell behind in payments (usually because of loss of employment), and now face a foreclosure on their home. Most people in this situation - once they are employed again - are able to maintain the current payment, but are unable to meet the demands of the lender in bringing the delinquency current. Chapter 13 would give you the opportunity to bring the loan current over time (up to 5 years), thus saving your home.
As stated above, bankruptcy should not be the first option in dealing with your creditors; however, if you face a foreclosure or IRS problems or a wage garnishment, some form of Bankruptcy may be your only effective solution. Jon A. Clark has been practicing Bankruptcy law for over30 years. All clients receive a free consultation, and competitive rates on fees. If you have serious debt problems, call Jon Clark today for your free consultation.