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Are Your Debts Overwhelming You?
Unanticipated expenses can deplete your savings and ruin your finances. If your bills are piled up, your debts are out of control, and debt collectors are calling, you may be considering bankruptcy. If so, it’s time to speak with a West Virginia bankruptcy attorney.
A bankruptcy attorney can explain your options and offer legal advice you can trust. If you do not qualify for what is called a Chapter 7 bankruptcy, or if you need to keep assets you would lose with a Chapter 7 bankruptcy, you may consider the Chapter 13 bankruptcy alternative.
How are these two types of bankruptcy different? What are your legal rights when you declare bankruptcy? What does a Chapter 13 bankruptcy entail? What will a West Virginia bankruptcy lawyer do on your behalf? If you will keep reading, you’ll find the answers you may need
What Are “Secured” and “Unsecured” Debts?
The language of bankruptcy is confusing to many. The federal laws of the U.S. are called the United States Code. As of 2023, the Code consists of 53 “titles” or sections. Title 11 is the U.S. Bankruptcy Code. Chapters 7 and 13 of Title 11 are the chapters addressing personal bankruptcy.
The two types of consumer debt are “unsecured” debt and “secured” debt. Secured debt reduces a lender’s risk by providing collateral to the lender until the debt is paid. The loans made by lenders who require no collateral are unsecured debts.
Unsecured debts, such as credit card and medical debts, are discharged by bankruptcy. Secured debts – taxes, student loans, alimony, child support, civil judgments, and civil or criminal fines – are not discharged. If you have mostly unsecured debts, bankruptcy may be right for you.
What is an Automatic Stay?
An “automatic stay” is a court order that takes effect immediately when you file for bankruptcy. The automatic stay prevents debt collectors or creditors from suing you, from taking any collection action against you, or even from calling you while the bankruptcy process is pending.
An automatic stay prevents a creditor from repossessing your vehicle, foreclosing on your home, garnishing your wages, freezing your bank accounts, or suing you for a debt, and it gives you the time and breathing space you may need to put your finances back in order.
How Are Chapter 7 and Chapter 13 Bankruptcies Different?
If you file for a Chapter 7 bankruptcy, the bankruptcy court will liquidate most of your assets to pay off as much of your debt as possible. Unsecured debts that cannot be paid through a Chapter 7 bankruptcy are entirely discharged at the end of the bankruptcy process.
However, with a Chapter 13 bankruptcy (also sometimes called a “reorganization bankruptcy”), you establish a payment schedule with your attorney’s help – a plan to pay your secured debts and whatever unsecured debts can also be paid – over a three-to-five-year period.
Bankruptcy has genuine consequences, particularly for your credit score. It’s not merely an easy way to get out of paying your debts. Honest people incur debts because of a serious injury, a severe illness, a death in the family, a divorce, or for a multitude of other reasons.
What Can a Chapter 13 Bankruptcy Accomplish?
You must pass a means test to qualify for a Chapter 7 bankruptcy. That test disqualifies those who can pay a portion of their debts.
If the Chapter 7 means test disqualifies you, you may still file a Chapter 13 bankruptcy which:
- Reorganizes payments and payment amounts for your home mortgage and your vehicle
- Halts a repossession or foreclosure: Chapter 13 bankruptcies allow consumers to catch up on past-due vehicle and mortgage payments and begin making full, current payments.
- Protects more of your assets: A Chapter 13 bankruptcy allows you to keep assets that would be lost under a Chapter 7 bankruptcy.
- Reorganizes child support and other divorce-related obligations: With a Chapter 13 bankruptcy, you pay child support and other divorce-related debts in a three-to-five-year period.
Is a Chapter 13 Bankruptcy Right for You?
After examining your finances and speaking with you personally, a West Virginia bankruptcy attorney will discuss your options, which may include a Chapter 13 bankruptcy, a Chapter 7 bankruptcy, or another option – for example, directly negotiating with your creditors.
A bankruptcy under Chapter 13 combines all of your debts into one monthly payment, lets you reorganize tax debt, allows you to avoid foreclosure and repossession, and helps you pay off other debts as well.
Depending on the size of your debt and your income, a Chapter 13 payment plan takes three to five years. During this time, debt collectors and creditors may not call you, contact you, harass you, or attempt to collect a debt.
Bankruptcy is a Serious Choice
Bankruptcy gives working people a fresh financial start and a chance to make lasting, positive changes. Others who file for bankruptcy make the same blunders again and end up with new debts almost immediately. If you file for bankruptcy, take advantage of the opportunities it offers.
For many, bankruptcy resolves their debt issues, but bankruptcy is a drastic choice – with some genuinely negative consequences – that may not be right for you.
Before you decide on bankruptcy, have all of your questions answered, and discuss your concerns about bankruptcy with an attorney you trust. Having a good attorney’s personalized advice about bankruptcy is essential. But how can you know which attorney to choose?
Meet the Hinkle Law Team
Filing for bankruptcy is a choice that can’t be made quickly, but if your debts are overwhelming you, and if you’ve carefully considered bankruptcy, the time to speak with a West Virginia bankruptcy lawyer is now.
Moreover, if your financial situation is out of control, if a home foreclosure is imminent, or if your vehicle is going to be repossessed, you have to act now. The team at Hinkle Law has the knowledge and experience you need.
We’ve guided scores of clients through the Chapter 13 bankruptcy process. We will represent you and advocate on your behalf, help you understand how the law applies to your personal financial situation, and help you move forward confidently and constructively into the future.
The offices of Hinkle Law are located in Charleston and Martinsburg, West Virginia and in Hagerstown, Maryland. To learn more about your options for debt relief, or to begin the bankruptcy process, promptly call Hinkle Law at (304) 592-4609.
