As a bankruptcy attorney, I consider myself to be on the “front line” when it comes to observing how a lot of folks are doing in this economy. For most of my bankruptcy clients, it’s gone from bad to worse. Many of my clients work, some only part-time, but there is no way they can make ends meet. Others have been out of work and have used up all their unemployment benefits and their credit. Still others have been in accidents or are sick, and have yet to qualify for disability.
The stigma of bankruptcy is slowly deteriorating as people line up to plead their case in the courts to receive a bankruptcy discharge. The US Bankruptcy Court is the court of last resort for a lot of these people and quite a few of them walk into court in tears.
Chapter 7 bankruptcy is what people typically think of when they hear the word “bankruptcy”. If your income is low and you have few assets, then this might be right for you. You can keep your house. And you can keep your car depending on how much it is worth and whether you can afford the payments. Your retirement plans are also safe. The rest of your debts are wiped out and you get to start anew.
With Chapter 13 bankruptcy, your debt is consolidated and reorganized. You pay it off in a monthly schedule. It lasts for three to five years and allows you to catch up on your mortgage, which is especially useful if your main concern is going into foreclosure on your home. Once you have finished catching up on past payments, you will return to making mortgage payments as normal. Most other debts are discharged at the end of your plan.
