What is a Chapter 13 Bankruptcy?

Did you know there is more than just one type of bankruptcy which can be filed? Most consumers who file, file for what is known as a Chapter 7 bankruptcy which is also known as a straight or liquidation bankruptcy. This type is the most common and is done when a person has limited assets. Most debts are discharged like credit card debt and loans, but the person does generally surrender things like homes and cars which are sold to pay down what is owed to the creditors. A bankruptcy lawyer in Escondido helps a person to file a Chapter 7 bankruptcy.

Another type of bankruptcy option is a Chapter 13 bankruptcy. This is also known as a reorganization and is most often used by people who have considerable assets in which they do not want to surrender or their income is more than the median family income for their area which disqualifies them for a liquidation bankruptcy. A bankruptcy lawyer in Escondido can help determine whether or not a borrower meets what is called a means test, the test for determine a person’s eligibility for Chapter 7 bankruptcy based upon their income.

Chapter 13 bankruptcies are effective in stopping a foreclosure on a home and a repossession of a vehicle. Filing for bankruptcy automatically stops all collection activity, including foreclosures. By agreeing to pay back a portion of the debt over a certain period of time– based upon your income and paid out up to five years– you will be able to keep your assets such as your home or vehicle. Keep in mind you are also agreeing to keep the debt associated with that asset, so if you own a home in which you are upside down in, you will continue to be upside down in it after the bankruptcy is closed. Talk to a qualified bankruptcy lawyer in Escondido to see if a Chapter 13 bankruptcy makes sense for you.

Changes in 2005 to the U.S. Bankruptcy Code require that people seeking bankruptcy relief must first complete budget and credit counseling within 180 days before the bankruptcy case filing. A qualified credit counseling agency can offer the counseling in person, over the phone or via the internet, and the cost generally runs $30 to $50. If you do not have the money to pay, you can petition the court to reduce or waive the fee.

Bankruptcy lawyer Escondido – If you are facing foreclosure or if the mountain of debt is more than you can handle, Get in touch with qualified Vista Bankruptcy who can help.

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