Cleaveland & Adair, P.L.

Bankruptcy

Purpose of Bankruptcy

          Over one and one-half million families file consumer bankruptcy cases each year.  Excessive interest rates on credit cards and car loans, as well as lenders financing mortgages that they know the consumer will likely not be able to afford, has created a downward spiral for many hard working families in America.

          Bankruptcy was enacted by Congress to give people a fresh start in life.  Enabling people to file bankruptcy helps avoid discouragement that would prevent a person from becoming reestablished as a hard-working member of society, striving to find the good life and fulfill the American Dream.  The Supreme Court of the United States has described bankruptcy as “a new opportunity in life, unhampered by the pressure and discouragement of pre-existing debt.”  Bankruptcy helps stimulate a capitalist economy by offering a form of a safety net for those who may have not fared well in the free-market.

Types of Bankruptcy

          The two most common forms of bankruptcy that are used by individuals are referred to by the chapters in the U.S. Code.  They are referred to as chapter 7 and chapter 13 bankruptcy.

Chapter 7 Bankruptcy

          Chapter 7 bankruptcy is often referred to as a straight liquidation bankruptcy.  Basically, all of the debtor’s nonexempt assets are converted to cash by the trustee in the bankruptcy court and distributed to creditors in accordance to bankruptcy rules.  At the conclusion of the bankruptcy proceeding, the debtor receives a discharge, which wipes out his or her obligation to repay most debts.

Chapter 13 Bankruptcy

          Chapter 13 bankruptcy is typically the bankruptcy option for individuals who make too much money to qualify for chapter 7 bankruptcy or for those that want to avoid having to liquidate current assets.  If an individual is behind in his or her mortgage payments, the filing of a chapter 13 bankruptcy may stop a foreclosure and allow the past due payments to be caught up in a repayment plan. 

          The debtor is allowed to keep all of his or her property and pays some or all debts according to a plan approved by the bankruptcy court.  At the completion of the plan approved by the court, with some significant exceptions, the debtor receives a discharge similar to the discharge received in a chapter 7 case.

Free Consultation

          For many, the filing of bankruptcy is a very important decision.  There are many questions that people have pertaining to bankruptcy and their individual situation.  We offer a free consultation in which you will be able to sit down with an attorney, not a paralegal or other staff member, to help determine whether bankruptcy is the right option for you.  To schedule your free consultation, call 904-642-2040.