Is Chapter 13 Or Chapter 7 The Best Bankruptcy Option?

Chap 13 gives men and women a number of advantages over liquidation under Chap 7. Perhaps most notably, bankruptcy filed under chapter 13 presents consumers a chance to preserve their homes from foreclosure. By filing under this chapter, men and women can avoid foreclosure proceedings and may fix delinquent mortgage payments over time.

However, they must still make all mortgage payments that come due during the chapter 13 plan on time. An additional plus of bankruptcy filed under chapter 13 is that it allows consumers to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 bankruptcy plan. Doing this may lower the payments.

CH 13 also has a unique provision that safeguards third parties who are liable to the debtor on “consumer debts.” This provision may shield co-signers. Last but not least, chapter 13 bankruptcy acts like a consolidation loan under which the individual makes the plan payments to a ch 13 trustee who then directs payments to creditors. People will have no one on one contact with creditors while under chap 13 protection.

Almost any person, even if self-employed or operating an unincorporated business, is a candidate for chap 13 help as long as the person’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are modified regularly to reflect changes in the consumer price index. A corporation or partnership may not be a chap 13 debtor.

A person is not able to file under chapter 13 or any other chapter if, during the previous 180 days, a previous bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or conform with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover assets upon which they hold liens. Moreover, no individual can be a debtor under bankruptcy filed under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an authorized credit counseling agency either in an individual or group briefing. There are exceptions in emergency conditions or where the U.S. trustee (or bankruptcy administrator) has established that there are insufficient approved agencies to offer the required counseling. If a debt management plan is produced while in necessary credit counseling, it has to be filed with the court.

An experienced MA debt lawyer can provide you with which options are right for you.

Bankruptcies Up In 2009

In this period of increased unemployment rates and home foreclosures, personal bankruptcy rates continue to increase. Last year, it has been reported, personal bankruptcies increased by over thirty percentage points. As more and more Americans face the financial realities brought on by our current economic situation, it is expected that bankruptcy filings will continue to increase.

In 2009, the U.S. saw the total number of filings pass 1.4 million. With last year’s filing increase, the total filing number was higher than it has been since 2005, the year the government significantly changed the bankruptcy laws in an attempt to drastically reduce the number of filings. The 2009 filing numbers are over double the numbers we saw in the year 2007.

Filings allowing debtors to liquidate assets to pay some debt and erase portions of debt, also known as Chapter 7 bankruptcies, increased by over forty percent by November. This is the latest data for such filings.

In addition to Chapter 7 increases, Chapter 13 filings are also on the rise. While Chapter 13 filings didn’t rise at the same rate as Chapter 7′s, they did increase by over 10%. These filings constitute less than 1/3 of the total filings.

Nevada and California each saw some of the highest increases in filings. However, no state surpassed Arizona which saw increases in filings of about 80%. While those states saw large filing increases, states like Pennsylvania and Tennessee saw much more limited increases with filings ranging between ten and fifteen percent.

As the national rate of unemployment continues to loom over ten percent, many citizens that had been financially secure are now in a position that bankruptcy makes more sense. Coupled with the decreased housing market, it is no surprise that many individuals are now strongly taking filing bankruptcy into consideration.

As bankruptcy filings continue to rise, it is become more common for Americans to know someone who has either filed or is considering filing for bankruptcy.

When you are facing creditor harassment, wage garnishment, or foreclosure, finding out your options needs to be your top priority. People often feel helpless when they find themselves in financial situations like this. Get a free bankruptcy consultation fromBankruptcy Attorney Massachusetts Matt Desrochers.