We specialize in consumer bankruptcy, both Chapter 7 and Chapter 13. Having been a Bankruptcy Trustee from the early 1980's into the 1990's, Mr. Gates' vast experience and knowledge of Bankruptcy laws and procedure will help guide you through the process. Whether you are facing foreclosure, repossession or are simply overwhelmed by credit card or medical debt, Gates Law Offices can find the right solution for you.
CHAPTER 7: You wipe out (discharge) your unsecured debts, such as credit cards, hospital bills, deficiency balances on repossessed vehicles, judgments, etc. You decide whether to surrender the collateral on secured debts like houses and cars or to keep them and continue paying for them. A trustee is appointed to administer your case. Any property of value beyond what you are entitled to keep under the available bankruptcy exemptions will be sold or turned into money to pay your creditors. You should be able to keep personal items and possibly real estate and automobiles assuming you are willing and able to continue making your regular monthly payments.
CHAPTER 13: You can usually keep all of your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The Court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan. Usually you will continue to make your regular house and automobile payments and the trustee will catch up any past due balances on these debts.
CHAPTER 12: Like Chapter 13, but is only for family farmers.
CHAPTER 11: This is used mostly by businesses. In Chapter 11, you may continue to operate your business, but your creditors and the Court must approve a plan to repay your debts. There is no trustee unless the Judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.
** If you have already filed a bankruptcy under Chapter 7 or 13, you may be able to convert your case to another chapter in the appropriate situation.
** Your bankruptcy may be reported on your creditor record for as long as seven years. It can affect your ability to receive credit in the future.
WHAT IS A BANKRUPTCY DISCHARGE AND HOW DOES IT OPERATE?
One of the reasons people file bankruptcy is to get a “discharge”. A discharge is a Court order which states that you do not have to pay most of your debts. Some debts cannot be discharged.
For example, you cannot discharge debts for:
- most taxes
- child support
- most student loans
- Court fines and criminal restitution
- Personal injury caused by driving drunk or under the influence of drugs
The discharge only applies to debts that arose before the date you filed.
Also, if the Judge finds that you received money or property by fraud, that debt may not be discharged.
It is important to list all of your property and debts in your bankruptcy schedules. If you do not list a debt, it is possible the debt will not be discharged.
The Judge can also deny your discharge if you do something dishonest in connections with your bankruptcy case, such as destroy or hide property, falsify records, or lie, or if you disobey a Court order.
You can only receive a Chapter 7 discharge once every six years. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not have to sign a reaffirmation agreement or any other kind of document to do this.
Some creditors hold a secured claim (for example, the bank that holds the mortgage on your house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, but the creditor can still take this property.
WHAT IS A REAFFIRMATION AGREEMENT?
Even If a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the Court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law nor by any other law. Reaffirmation agreements:
- must be voluntary
- must not place too heavy a burden on you or your family
- must be in your best interest
- can be canceled at anytime before the Court issues your discharge or within 60 days after the agreement is filed with the Court, whichever gives you the most time.
If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you.