Understanding New Bankruptcy Law
There have been some recent changes in bankruptcy law. The changes make it harder to file bankruptcy. The credit industry wrote the new laws and spent over 80 million dollars getting them through congress. This is at a time when the credit card companies profits are at an all time high, but they want to make even more profits off the American consumer.
However, bankruptcy is still an option. Don’t let the hysteria of the media scare you. Congress has not eliminated bankruptcy and the average person in financial difficulty may still discharge most of their debts in bankruptcy. Our Jackson bankruptcy attorney is determined not to let the credit industry bully consumers. We are here to help you through the tangled web that the credit industry has made of the bankruptcy laws. While it may be more difficult to file, with the right attorney and the right timing, you can still exercise your constitutional right to a fresh financial start.
We can guide you through this difficult time. We will work to help you towards a better, more secure financial future. Our knowledgeable attorney can evaluate your circumstances and then inform you of your options. Visit the Law Offices of Diane Anderson in Roseville, Folsom, Citrus Heights, or Jackson for a consultation today.
How Does Bankruptcy Work? What Bankruptcy Can and Cannot Do
What Bankruptcy CAN Do
When considering bankruptcy, it’s important to know what bankruptcy can do for you. You may be dealing with a significant amount of debt, calls from creditors, and an overwhelming number of payments. Bankruptcy can give you relief from all of that. But how does bankruptcy work? Here are some things that bankruptcy can do for you:
End Creditor Harassment and Stop Collection Activities
Creditors are likely calling, emailing, or otherwise contact you. It can be overwhelming to have people you don’t know constantly call you about your debt. It may even rise to the level of harassment, especially if you’ve requested that they stop.
That creditor harassment will stop when you file bankruptcy. Bankruptcy puts into place an automatic stay that will stop collection calls and efforts to collect debts from you. If they call you despite this, you should speak to your bankruptcy attorney.
Temporarily Pause Foreclosure and Repossession
Because foreclosure and repossession are collection activities, they also pause during an automatic stay. However, they are only paused during your bankruptcy or during the active time of your automatic stay. Those processes can begin again after your automatic stay ends or your bankruptcy is complete.
It’s important to understand how does a bankruptcy work to know that an attorney can help you manage your home or car account so that you don’t have to face foreclosure or repossession. You may be able to keep your property and bring your accounts current, even if you are filing bankruptcy. During bankruptcy, you may be able to catch up on payments or negotiate with the companies to roll past due amounts into the primary amount due.
An automatic stay also stops an eviction during the course of the bankruptcy. Because eviction is usually a litigation against you in court, filing bankruptcy can put a stop to this as well. However, if there is already a judgment against you, then your landlord may be able to continue the eviction even if you file bankruptcy. It’s important to consult an attorney if you’re facing eviction.
Eliminate Credit Card Debt and Other Unsecured Debts
Unsecured credit card debt is one of the first types of debt you can successfully manage through bankruptcy. However, it may be handled differently if you file Chapter 7 than if you file Chapter 13. A Chapter 7 bankruptcy will likely eliminate all unsecured non-priority debt within a few months. However, Chapter 13 may require that you repay some of your credit card debt and other unsecured debts in a three- to five- year payment plan. If any credit card debt remains after your Chapter 13 payment plan, it will likely be discharged.
Eliminate Secured Debt
Secured debt is that which is tied to property, such as a car or home. You should understand how does bankruptcy work so that you know what will happen to your secured debts. With Chapter 7, you may have to give up your house, car, and other collateral that is tied to the secured debt. However, the bankruptcy filing will eliminate it completely. With Chapter 13, you may be able to keep some of your property and restructure your payments. A bankruptcy attorney can help you determine what should be done with your secured debts and collateral.
How Long Does Bankruptcy Take?
When understanding how does bankruptcy work, you will likely want to know how long bankruptcy will take. The answer is that it depends on the type of bankruptcy that you are filing.
- Chapter 7 Bankruptcy – It can take several months to complete a Chapter 7 bankruptcy. Between three and four months is common. Your attorney must complete necessary paperwork, attend hearings, and complete all requirements.
- Chapter 13 Bankruptcy – It can take three to five years to complete a Chapter 13 bankruptcy. Although the filing of legal documents and hearings may only take a few months, the payment plan must last up to five years. This allows you time to repay your creditors in a manageable manner.
What Bankruptcy CANNOT Do
When considering how does bankruptcy work, it’s also important to know what bankruptcy cannot do. Although bankruptcy can help you with many of your debt issues, it does not cure all debt problems. In fact, it cannot do many things.
Eliminate Child Support and Alimony
Bankruptcy can discharge unsecured debts easily, but any court ordered debt will still remain during and after your bankruptcy. However, if you choose to file Chapter 13 bankruptcy, your payments for these court obligations may be managed through your three- to five-year payment plan. You should also be able to roll past due amounts into your payment plan as well. If you file Chapter 7 bankruptcy, your debts will still remain after your bankruptcy is finalized. However, since you no longer have to pay unsecured debts and other unmanageable amounts, you may have more funds for court ordered obligations.
Eliminate Student Loans
In most situations, bankruptcy cannot eliminate your student loans. However, there are limited circumstances in which student loans may be discharged for “undue hardship” or another limited cause. Your attorney can review your situation and help you understand if your student loans may be impacted by bankruptcy.
Eliminate Tax Debt
Tax debts typically endure a bankruptcy; however, there are some situations where you may be able to discharge very old tax debt.
Eliminate Nondischargeable Debt
Although bankruptcy can completely do away with your unsecured debt, there are some debts that are nondischargeable. Those that are fraud related, were not listed on your bankruptcy paperwork, due to personal injury cases, or legal fines and penalties cannot be discharged.
Contact Us to Understand More About Bankruptcy Law
If you are thinking about filing for bankruptcy, contact a skilled attorney at the Law Offices of Diane Anderson today.