Call Today for a Free Consultation
(954) 947-7147
Bankruptcy
At Orr Legal, our goal is to assist all our clients in maximizing the benefits provided by the U.S. Bankruptcy Code. Bankruptcy serves as a crucial legal protection for individuals and businesses facing overwhelming debt with no alternative solutions. However, lack of understanding regarding the intricate laws may result in incomplete debt discharge and potential loss of assets at the conclusion of the bankruptcy process.
What is Bankruptcy?
Bankruptcy is a formal legal process that is initiated when an individual or a business is unable to fulfill their financial obligations and repay their debts. It provides an opportunity for individuals who are no longer able to afford their expenses to start anew. The process of bankruptcy commences with the submission of a petition by the debtor, which is the more frequent scenario, or by the creditors, which is less common. During this process, all of the debtor's assets are assessed and appraised, and these assets may be utilized to partially repay the outstanding debt.
What are Common Types of Bankruptcy?
Chapter 7 Bankruptcy: Chapter 7 Bankruptcy is commonly chosen by individuals seeking to eliminate unsecured debts, including credit card balances and medical bills. If you possess nonexempt assets like valuable collections (e.g., coin or stamp collections), second homes, or investments such as stocks or bonds, you will need to liquidate them in order to repay a portion or all of your unsecured debts. By filing for Chapter 7 bankruptcy, you essentially sell off your assets to settle your debts. However, individuals who only possess exempt property, such as household items, clothing, tools related to their profession, and a personal vehicle within a certain value range, may not be required to repay any of their unsecured debt.
Chapter 13 Bankruptcy: People who earn above the threshold for Chapter 7 bankruptcy eligibility can opt for Chapter 13, also referred to as a wage earner's plan. This option enables individuals, and even businesses with steady income, to establish feasible debt repayment schedules. The repayment plans typically span over three to five years, with payments made in installments. In return for repaying what is owed to creditors, debtors are permitted by the courts to retain ownership of all their assets, even those that are typically not exempt from liquidation.
Filing for bankruptcy is no longer as powerful as it once was due to changes in the law in 2005. As a result, fewer individuals are eligible for bankruptcy now compared to the past. Despite this, taxes, student loans, and judgment liens often remain even after the bankruptcy process is finished. Nevertheless, bankruptcy remains the most effective debt relief option for many individuals facing financial difficulties.