Under the federal bankruptcy code individuals can discharge consumer debt in bankruptcy which allows them to start fresh. Filing for bankruptcy puts into effect the "automatic stay." The automatic stay immediately stops your creditors from trying to collect what you owe them. When you file for Chapter 7 bankruptcy, many of your debts will be canceled without any further repayment. In exchange, you might have to surrender some of your nonexempt property. Property that is exempt and need not be surrendered would be motor vehicles, clothing, household furnishings pensions and life insurance. The complete process takes about three to six months and commonly requires only one trip to the courthouse.
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Common debts that are discharged by Chapter 7 bankruptcy are:
(1) Credit card debts, (2) Utility [telephone, gas, and electric service] debts, (3) Debts for professional Services [Doctors, dentists, attorneys, accountants], (4) Executory contracts and unexpired leases, (5) Department stores and catalogue charges, (6) Personal loans, (7) Federal and state tax liability.
Chapter 13 bankruptcy allows people to repay a portion of their debts with court supervision, over a three to five year period. Chapter 13 lets you rearrange your financial affairs, repay a portion of your debts and put yourself back on your financial feet. Under a typical plan, you make monthly payments to a bankruptcy trustee, who is appointed by the bankruptcy court to oversee your case. The bankruptcy trustee distributes the money to your creditors.
The most common reasons for filing a Chapter 13 bankruptcy are:
(1) The debtor is behind on his/her mortgage or car loan, and wants to make up the missed payments over time and reinstate the original agreement, (2) The debtor has valuable nonexempt property, (3) The debtor is not eligible for a discharge under Chapter 7 bankruptcy [the debtor has filed a prior Chapter 7 bankruptcy within the last 6 years], (4) The debtor has one or more substantial debts that are not dischargeable under Chapter 7 bankruptcy, but are dischargeable under the Chapter 13 bankruptcy [certain tax claims], (5) The debtor has a sincere desire to repay his/her debts, but needs the protection of the bankruptcy court to do so.
In many bankruptcy cases the debtor has an unpaid federal, state or local tax bill that will be included in the bankruptcy schedules filed with the petition. Our firm specializes in discharging income tax, property taxes, payroll withholding and employers' employment taxes, sales tax, excise tax, and social security payments, in bankruptcy.
If you would like to arrange a meeting to discuss these matters in more detail, please give us a call, and we would be happy to discuss the best plan to accomplish your objectives.
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