Bankruptcy is a legal proceeding that allows a debtor, either an individual or a business entity, to get out of debt and gain a fresh start financially.  There are four types of bankruptcy; however, one is generally for businesses and the other for farmers.  The two main types for individuals are Chapter 7 and Chapter 13, which are described below.


Chapter 7 Bankruptcy, allows an individual to discharge virtually all debs and get a fresh start.  In a Chapter 7, all unsecured creditors are completely discharged.  Unsecured debts are debts such as medical bills and credit card debts.  A secured debt is a debt where the creditor holds an interest in collateral that is in the debtor's possession.  These kind of debts generally include, bank mortgages or car loans.  In these debs the creditor holds an interest in the property until the debtor has paid off the loan.  In a Chapter 7 bankruptcy the debtor will either have to surrender the secured possession or agree to continue making the payment to the creditor to keep the property.


Chapter 13 Bankruptcy, is simply a reorganization plan.  In a Chapter 13, the debtors can usually keep all of their property.  It is designed for "wage earners" whose income mandates that a portion, or all, of their debts be repaid.  In addition, a Chapter 13 allows a debtor to repay mortgage arrearage to avoid foreclosure.  The length of time a debtor has to make payments of a portion of his wages is either three or five years depending upon his/her financial circumstances.  The advantage of a Chapter 13 is that the debtor loses no property, regardless of the total value of the assets.


In the event you own real estate and have fallen behind on your mortgage payments, Chapter 13 allows you to repay the arrearage over time and keep the house.  Chapter 13 also allows debtors to repay car and furniture loans within the plan for potentially the current value of the property or the balance on the loan at potentially a reduced interest rate.


Once a bankruptcy has been filed an "automatic stay" occurs which prohibits most creditors from continuing actions against a debtor.  This means lawsuits filed against a debtor in state and federal courts will have to stop, garnishments of wages must stop, and you will be free from a creditor attempting to repossess your vehicle.


Debts in bankruptcy are considered either dischargeable or non-dischargeable.  Most debts are dischargeable under Chapter 7 bankruptcy.  This means the creditor no longer needs to be paid back and the debt is deemed cancelled.  There are debts which are non-dischargeable.  Some of them included educational loans and child support.  Christoper C. Crawford can discuss with you if you have debts that you may continue to be responsible for even after your bankruptcy is filed.


The process of filing bankruptcy is a simple one.  After we have prepared your petition for bankruptcy, we file it with the Clerk of Bankruptcy Court in the Northern District of Indiana.  The court then notifies your creditors of your bankruptcy filing within approximately two weeks.  However, you may notify creditors of your filing earlier if necessary to stop creditor harassment.


After the filing of your petition, you will receive a notice of the first (typically only) meeting of creditors.  You must appear at this hearing; otherwise, your bankruptcy may be dismissed.  At the hearing, a bankruptcy trustee will ask you general questions concerning your assets and other information contained in your petition.  Most first meetings for simple personal bankruptcies are straightforward and last only a few minutes.


Thereafter, in most cases, in less than five months from the date of filing your Chapter  Petition you will receive a discharge of your debts. In a Chapter 13 the discharge will occur after you have fulfilled the requirements of your Chapter 13 Plan.


The above represents a brief synopsis of what bankruptcy is all about.  At your consultation with Christoper C. Crawford he will discuss your case with you and discuss with you what option would be the most appropriate based upon your individual circumstances.


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