Practice Areas

Chapter 7

Many people prefer Chapter 7 bankruptcy, since there is no debt limit to a Chapter 7 bankruptcy – as there is with Chapter 13. A Chapter 7 filing involves the liquidation of personal or business assets to pay off debtors.

Once a person declares Chapter 7 bankruptcy, the court assigns a trustee to the case who gathers all of that person’s non-exempt assets for the purpose of selling them. Once this is done, the proceeds are distributed to creditors.

Once these creditors are paid, they can not seek any additional payments. In addition, once a bankruptcy proceeding is initiated, creditors can no longer contact debtors for payment.

Chapter 13

Chapter 13 bankruptcy applies only to individual people who have a regular source of income. Furthermore, there are limits as to the level of debt that a person may possess prior to taking advantage of this program.

In short, the trustee for a Chapter 13 case meets with the creditors and explains that the debtor is reorganizing their debts and income. The court then orders the debtor to make regular payments that are transferred to the creditors. Once the debtor does this for three years, the debts are forgiven.