Is Bankruptcy the Right Option For Me?

Bankruptcy is a choice that may help, if you are facing serious financial problems.  Depending on the circumstances, you may be able to cancel your debts, stop collection calls, and get a fresh financial start.

Bankruptcy can help you with some financial problems, but does not guarantee you will avoid financial problems in the future.  If you choose bankruptcy, you should take advantage of the fresh start it offers and then make careful decisions about future borrowing and credit, so you won’t ever need to file bankruptcy again.

There are four types of bankruptcy cases available under federal law: Chapter 7, 13, 11, and 12. Individual debtors usually file a chapter 7 or 13 bankruptcy case. Both cases require a debtor to file lists of ALL debts and ALL property of any kind that the debtor owns and to answer questions under oath asked by the trustee and by creditors early in the case.

What Chapter 7 Bankruptcy Can Do For You

  • Eliminate the legal obligation to pay most or all of your debts, which can give you a fresh financial start.
  • Stop foreclosure on your house and allow you the opportunity to catch up on missed payments.
  • Prevent repossession of a car or other property.
  • Stop wage garnishment and debt-collection harassment

In this article we’ll talk about the two main types that most individuals file.  Those are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 is known as “straight” bankruptcy or “liquidation.” It is the most common option for individuals or consumers and a trustee is appointed to administer the estate which consists of all property owned by the Debtor at the time the bankruptcy is filed.  Any non-exempt property can be sold by the trustee to pay off the debtor’s creditors. Chapter 7 is designed for debtors in financial difficulty who cannot repay their debts.

If you want to keep property like a home or a car and are behind on payments, a Chapter 7 case may not be the right choice for you. Why? This type of bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

Most Chapter 7 cases take about four to five months to complete. The debtor usually gets his or her discharge within two to three months after the meeting with the trustee and creditors.

Chapter 13 Bankruptcy

Chapter 13 is a type of “reorganization” used by individuals to pay all or a portion of their debts over a period of years using their current income. As the debtor, you can usually keep your property, but must continue to earn wages or have a source of regular income.

If your income is above the median family income in the state of New Mexico, you may be required to file under Chapter 13. Higher income consumers have to fill out a “means test” form requiring detailed information about their income and expenses.

If that form indicates, based on standards in the law, that you have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that you can’t file under Chapter 7, unless there are special circumstances.

The most important thing about a Chapter 13 case is that it will allow you to keep valuable property, in particular your home and car, if you can make the payments that the bankruptcy court requires that you make to your creditors.

In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car with some extra payments for the amount you are in arrears.

You should consider filing for Chapter 13 if you:

  • Own your home and are in danger of losing it;
  • Are behind on debt payments, but can catch up if given some time;
  • Have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

In Albuquerque, the Law Office of George “Dave” Giddens, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.

The New Mexico firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment or visit the firm’s website at Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.