Bankruptcy

Emerge America is not a law firm and does not provide legal advice. We have aligned our firm with a national network of law firms (for the benefit of our clients) that provide high quality bankruptcy counseling and services. For this service Emerge America will only provide you as a referral to the network, we Do Not charge consumers a fee for this service.

What is Bankruptcy

Bankruptcy is a process in which consumers can eliminate or repay some or all of their debts under the protection of the federal bankruptcy court. For the most part, bankruptcies can be divided into two types -- liquidation and reorganization.

Chapter 7 bankruptcy comes under the liquidation category. It's called liquidation because the bankruptcy trustee may take and sell ("liquidate") some of your property to pay back some of your debt. However, you may keep property that is protected (also called "exempt") under state law.

There are several types of reorganization bankruptcies, but Chapter 13 is the most common type for consumers. In Chapter 13 bankruptcy, you keep all of your property, but must make monthly payments over three to five years to repay all or some of your debt.

Both Chapter 7 and Chapter 13 bankruptcy have many rules -- and exceptions to those rules.

Benefits of Bankruptcy (A fresh start)

Once a bankruptcy petition is accepted by the court, an automatic stay goes into effect, which yields the first pro of bankruptcy: the cessation of most credit collection attempts, including those annoyingly constant phone calls. Through Chapter 7 bankruptcy, debtors can get out from under most kinds of debt, including credit card debt, without having to pay. In Chapter 13, the terms of mortgages and other loans can be modified to reflect current property values, and the interest rates can be lowered. At the same time, most states have exemption laws that protect a homestead, vehicle and other essential assets from liquidation, even in a Chapter 7 bankruptcy.

Advantages of Chapter 7

• Write-off debt. Chapter 7 bankruptcy allows people to write-off debt and resolve money problems. There is no minimum level of debt before this debt solution can be used.
• Speed. The insolvency process only takes in the region of 3 to 6 months.
• Exempt property. Filing for bankruptcy doesn't cause the loss of personal pensions, household appliances, vehicles (up to a certain value) and the tools of the trade necessary for business.
• Adverse credit lenders. Whilst borrowing money is more difficult due to having a poor credit score, there are several adverse credit lenders that may be prepared to offer mortgages and credit cards once a few years have subsequently elapsed.
• Prevents foreclosure. Whilst there is only a provisional hold-up on foreclosure, this provides a homeowner with time to get back on their feet and come up with a viable repayment plan.

Advantages of Chapter 13

• Chapter 13 Bankruptcy protects individuals from the collection efforts of creditors
• Permits individuals to keep their real estate and personal property; and
• Provides individuals the opportunity to repay their debts through reduced payments.
• Another benefit is that the time your Chapter 13 bankruptcy shows on your credit report is less, so it takes less time to rebuild your credit.
• You may be able to discharge debts in a Chapter 13 Bankruptcy that would be non-dischargeable under other Chapters, for example, fraud judgments.
• Both a Chapter 7 & 13 filing require mandatory credit counseling (a short program, typically 1 hour) preparing you for the rebuilding process.