In general, bankruptcy cases involve four factors: the amount and type of debt, the value of assets, the amount of income, and living expenses. The relationship of these four areas determines which type of bankruptcy is allowed or recommended. At the end of the bankruptcy proceeding the Court will issue a discharge of your debts. This prevents any of these creditors from ever again collecting on those accounts.

Chapter 7 Liquidation — Most debts can be discharged through a Chapter 7 bankruptcy. Important exceptions are student loans, mortgage and vehicle loans for houses and cars you wish to keep, recent tax debts, and a few other categories. The allowed income level is set by Congress, as is the amount of property you can keep.
Chapter 13 Reorganization — Those who do not qualify for Chapter 7 usually can enter into a repayment plan under Chapter 13. This type of bankruptcy is a flexible tool for handling a variety of situations: catching up on delinquent mortgage payments over time, repaying back income taxes, protecting cosigners, and stretching car payments. A typical Chapter 13 lasts 3 to 5 years.

Bankruptcy law has always been complex, and this was exacerbated by changes which took effect in October 2005. To fully understand your options, you are strongly encouraged to consult with a bankruptcy attorney.

The Law Offices of Dean L. Woerner
PO Box 411405, San Francisco CA 94141


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