As soon as a bankruptcy petition is filed, an “automatic stay” is triggered. The automatic stay is a restriction placed on all of the debtor’s creditors. This means that all creditors must stop making attempts to collect payment from the debtor. A creditor can no longer make harassing phone calls or pursue any legal action against the debtor outside of the bankruptcy proceeding. All assets of the debtor are placed in a “bankruptcy estate” and a trustee is appointed to evaluate the worth of the assets. Some assets can be excluded from the estate through exemption laws that would allow the debtor to keep such property. Other debts may pass through the estate through reaffirmation. In a Chapter 7 bankruptcy filing, the remaining assets in the bankruptcy estate are sold to pay creditors and the debtor may be eligible for a discharge of any remaining debt. In a Chapter 13 bankruptcy filing, the debtor will most likely be able to keep their assets in exchange for payments to a negotiated plan that can last 3 to 5 years.
A very common type of debt that may cause trouble for consumers is credit card debt. Credit card companies sometimes use deceptive and unfair lending practices that allow them to charge very high interest rates, late fees and other administrative fees. If you are experiencing financial strain because of your credit card debt, bankruptcy might be an option. If you are eligible to file a Chapter 7 bankruptcy, any debts that can’t be paid off by the sale of your assets will be discharged. This means that you will no longer be responsible for making those daunting credit card payments. If you file for a Chapter 13 bankruptcy, your debts may be restructured and reduced so that you will be able to make payments according to a 3 to 5 year plan. All of this can be accomplished while keeping most of your assets. Other debts that may be eligible for discharge under Chapter 7 or restructure under Chapter 13 include: personal loans, medical bills, utility bills and some eligible tax debt.
If you are experiencing financial hardship and are unsure about your options, call a bankruptcy attorney from Villani & DeLuca, P.C. Attorney Robert H. Johnson, Esq. will take the time to discuss your options and formulate a plan to help you get back to good financial health. Call 732-965-3350 today to schedule your free initial consultation.