Part 2: The choice between Chapter 7 and Chapter 13 bankruptcy

We recently began a discussion of the choice most consumers who file for bankruptcy relief have between Chapter 7 liquidation bankruptcy and Chapter 13 reorganization. Despite some economic improvement across the country, many individuals and families still struggle to stay solvent financially through no fault of their own and may wonder whether bankruptcy should be considered.

Any New Mexican facing the challenge of insurmountable debt should speak with a bankruptcy attorney to understand whether bankruptcy is a good option or whether some other approach to debt relief makes more sense. Legal counsel will explain the difference between the two types and discuss the pros and cons of each considering the client’s unique circumstances.

The automatic stay

One advantage of both types is that filing of the bankruptcy petition automatically generates a court order that stays debt-collection efforts. This normally means that creditors may not contact the debtor about debts owed and that lawsuits or wage garnishment to satisfy debts also must stop.

Chapter 13 basics

Chapter 13 is sometimes called a wage earner’s plan because to be eligible, the debtor must have regular income. The key feature is the use of a three-to-five year repayment plan that must be approved by the federal bankruptcy court. The plan allows the debtor to repay debts, although some may not be fully satisfied. Most kinds of debt remaining after the plan concludes are discharged, meaning extinguished, so that the debtor must no longer pay them.

One important reason that a debtor might choose Chapter 13 is that it often provides a way to keep a house despite being behind on a mortgage or in foreclosure.

A bankruptcy lawyer can answer questions about Chapter 13 in detail.

In Albuquerque and throughout New Mexico, the law firm of Giddens & Gatton Law,amp; Jacobus 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.

We represent many debtors and creditors in Albuquerque, Santa Fe, Las Cruces, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C., at 505-273-3720 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C., is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.