North Dakota Bankruptcy Lawyer
Chapter 7 and Chapter 13 Consumer Bankruptcy
If you are struggling to keep up with your monthly expenses because of outstanding debt related to credit cards or medical bills, bankruptcy can help you get a fresh start. It does not take much to have debt build up and eventually spiral out of control. Most Americans are one missed paycheck or one medical issue away from financial turmoil.
How Does Bankruptcy Work?
Bankruptcy is a legal process designed to protect individuals or businesses who are unable to repay their debts. Bankruptcy either eliminates or restructures your debt in a way that you can manage. The bankruptcy process is overseen by the federal bankruptcy courts, each of which are managed by a “Trustee”. The process that you will go through is largely dependent upon what type of bankruptcy you are filling. There are two main types of consumer bankruptcy: chapter 7 and chapter 13, you can read about those here.
What Protections Does Bankruptcy Provide?
Depending on whether you file chapter 7 or chapter 13, your bankruptcy will either eliminate (in Chapter 7) or restructure (in Chapter 13) your existing debt. Once you have filed for bankruptcy, the “Automatic Stay” goes into place. The “Automatic Stay” is a very powerful tool that is meant to stop ALL creditor actions. “Creditors” are the businesses that you owe money to. “Creditor Actions” include any action that could be taken against you by people that you currently own money. Some of the creditor actions that the automatic stay will protect you from include:
- Home Foreclosure
- Collection Calls
- Eviction from a Rental Property
- Wage Garnishments
- Utility Disconnection
While there are protections provided by the automatic stay, the debt related to your utility bills and housing will still need to be paid. The automatic stay makes it so that no one can take action against you, but it does not cancel all of the related debt.
What Debt CAN Be Discharged Through Bankruptcy?
Credit Card Debt – All unsecured consumer debt can be discharged in a Chapter 7 or reorganized in a Chapter 13 bankruptcy. Visas and MasterCards secured through major banks like Capital One and Bank of America are treated the same as consumer cards from retail stores or other loans with monthly payments or installments.
Medical Debt – One of the biggest misconceptions about bankruptcy is that you can’t file against medical debt. However, a medical problem, or the hospital bills related to a medical problem, is what pushes many Americans to bankruptcy. Even people who had health insurance coverage can easily become over-burdened by medical debt.
What Debt can NOT be Discharged Through Bankruptcy
Student Loan Debt – There are very few cases where student loan debt can be discharged. However, discharging or re-organizing credit card debt can help ease the burden of your monthly student loan payments.
IRS Debt – Bankruptcy will not discharge debt with the IRS. There are cases where it can be reorganized and put into a plan (with Chapter 13 bankruptcy) so if you are making monthly payments and they are too much to handle bankruptcy may be able to help, but it will not eliminate or reduce the actual principle amount owed to the IRS.
Learn How Bankruptcy Will Apply To Your Situation
You likely have your own set of concerns about how bankruptcy will impact your specific financial situation. I am happy to answer your questions during a free initial consultation. I will help you understand how the protections offered through the US Bankruptcy code will apply to you.