The first few months of the year are peak time for people making the decision to file bankruptcy. After nearly 20 years of counseling people going through this process, I understand it is still a difficult choice to make.
The most used varieties of bankruptcy are Chapters 7 and 13. A Chapter 7 bankruptcy allows for the forgiveness of debts but imposes an income limit for eligibility. Also, since it allows for debts to be wiped away, the waiting period between cases was extended to eight years by the 2006 bankruptcy law changes. Chapter 7 Bankruptcy will stop garnishment of wages.
Chapter 13 is a reorganization of debts. For higher income earners, it is required, instead of Chapter 7. It is also the way to go for individuals and families faced with foreclosure. Chapter 13 Bankruptcy will also stop garnishments. The most useful part of Chapter 13 filings, however, is that it allows people an avenue to stop the sale of their home up to the morning of the Sheriff’s sale. They can work out a plan to repay their debt – usually at a reduced rate – over a five-year period. The payments are based on current income and are within the individual earning ability of filers.
The Gouner Law Office has also successfully challenged collection lawsuits without bankruptcy. If you are in a situation with overwhelming debt, call our office to discuss your options.
Written by: Greg Gouner
