Here’s the fundamental difference between Chapter 7 and Chapter 13 Bankruptcy:
Chapter 7 “wipes away” your Debt.
Chapter 13 is a re-payment plan for that Debt.
You could fill a Library explaining all the little details of that difference, but in the end, that’s the bottom line. In Chapter 7, you get out of paying. In Chapter 13, you’re stuck paying. Plus, the Legal Fees in a Chapter 13 run thousands and thousands of dollars more than in a Chapter 7.
To be clear, some Debt does not get wiped away in a Chapter 7. Child Support and Student Loans won’t go away. If a person chooses to keep a car, or a home on which they owe money, they have to agree to have that Debt taken out of their Chapter 7 and continue paying for it
In Chapter 13, a percentage of the total Debt is repaid. That can range from a low of about 25% of the total debt up to 100%, or all of it. Beyond that, Chapter 13 Legal Fees are way higher than those for a Chapter 7 case.
Here’s where I’m different. I only handle Chapter 7 cases. That’s a good thing, because I have every reason to make sure a person Qualifies for Chapter 7 before giving up and referring them to a Chapter 13 Specialist.
“Qualifying” for Chapter 7 basically means that a person does NOT have too much income, or too much money left over at the end of the month. That’s a problem most callers DO NOT have.
If a person makes too much money, or has too much left over after they pay all their bills (and there are certain, very specific amounts that the Law allows to be spent on certain things, like housing, car expense, food, and so on), then they cannot file a Chapter 7 Bankruptcy. In that case the only Bankruptcy Option they have is to enter into a re-payment plan of some kind under Chapter 13.
Because my Office only handles Chapter 7 Bankruptcy Cases, I have every reason to try everything humanly and legally possible to get a potential Client qualified. If I can’t qualify a person for Chapter 7, (and I’ve had a 100% success rate at getting each Client that I have represented Discharged for nearly 20 years), then I lose their business. I have to send them to a Chapter 13 Attorney.
And while I’m not even suggesting that any other Lawyer would be less than completely honest, you’ve got to admit, if their Office also handles Chapter 13 Bankruptcy Cases, and it seems that qualifying for Chapter 7 might not be so easy at first glance, they do lack the incentive I have to leave every stone unturned in my effort to try and work it out. In fact, whereas I lose the potential business, they wind up making more money.
Filing under Chapter 7 is the better option not only because the Legal Fees are so much less than in a Chapter 13, but also because a person will be done and over with the whole process, essentially debt-free, and on the road to rebuilding their Credit, within about 4 months under Chapter 7.
If a person’s income, expenses, allowances and circumstances can be “adjusted” to fit within requirements and limitations of a Chapter 7 Bankruptcy, then they can pay a lot less to the Lawyer, and just get out of Debt quickly.
In some cases, there is simply no way for a person, or family, with too much income, or too few expenses, to file for a Chapter 7. In those cases, Chapter 13 still beats the living daylights out of one of those over-priced, slickly advertised Debt-Reduction schemes. I guarantee that no one reading this has EVER met anyone who recommended one of those operations.
Chapter 13 Cases take years and years. In some cases, they can take up to 5 years to complete, and only then, after they have finished the long payment plan, can a person start to rebuild their Credit.
In the end, and for all of that, anyone looking to file a Bankruptcy Case, or even considering it, should absolutely call around and do some homework before they decide who to hire. Nothing beats assessing a Lawyer’s approach and attitude like calling their Office and getting some answers to your questions.
Even though I’m really good at what I do, I understand I’m not the Lawyer for everyone. But you won’t know who’s a good fit, or even a better fit for you, until you pick up the phone and start dialing some numbers.
Bankruptcy Quick Start Guide national bankruptcy services.com
If you want the quick version of filing for Bankruptcy, below you will find an overview of the procedures used in my office. We try to make the process as easy as possible, with the emphasis on easy. It goes like this:
- Your initial call to my office.
Your phone consultation is free and confidential. We’ll answer your questions, and ask you questions such as: How many in your household? How much money do you earn? What are your expenses? Do you own any real estate? How much do you think it’s worth and how much do you owe on it? We’ll ask those and other questions to make sure you qualify for Chapter 7 Bankruptcy. If you do not qualify, we will tell you why and give you some other options that might be helpful. If you do qualify, and are ready to proceed, we will schedule an office appointment to get things started. We’ll tell you what documents to bring. There are no forms to fill out in my office.
My fee for a Chapter Standard 7 Bankruptcy is $901, plus the Bankruptcy Court filing fee of $299, for a grand total of $1200. There is a $50 discount for cases paid in full up front.
- Your first office visit.
We’ll go over your pay stubs and any other paperwork you brought with you. A minimum of $100 is required at this visit as a retainer. There is a $50 discount for those cases paid in full at that first meeting. If you can’t pay the balance in full (and most people cannot), there is a payment plan that requires roughly $185 for the next six months. This is usually not a problem because for anyone because they will be saving at least that much by not making any further payments to their creditors.
- The end of your first office visit.
You may be given a list of any additional thing that we may still need. It can be e-mailed, faxed, or sent by regular mail to my office. Of course, you can always just call and make arrangements to come by, and we’ll be happy to make and/or take copies of whatever we need that you want to bring directly to us.
Once your fees have been paid off and we have all the documents we need, we will complete your Bankruptcy Petition and have you review and sign it. We will then electronically file your paperwork with the Bankruptcy Court. You will immediately be assigned a case number and be legally protected by what is called the “automatic stay” provision of the bankruptcy laws. This means your creditors are stopped dead in their tracks and can no longer come after you. Your court date (I’ll be there with you) will be in about 4 to 6 weeks from the time your case is filed.
- The court date.
Your court date is called the “Meeting of Creditors,” which is kind of ironic because in most cases, none show up. This quick hearing, which usually lasts 3 minutes or less, is more about making sure you are not hiding property or “forgetting” to list things you own, than anything else. I sit right next to you, and make sure everything goes easily and smoothly. After your case is heard, I will typically have a little “wrap-up session” with you outside the Hearing Room, and will explain about rebuilding your credit over the coming year.
- The Discharge.
You should receive your Bankruptcy Discharge in about 90 day or so from your court date. Discharge means your case is over, and all the debts you chose to get rid of have been wiped away forever. You then have a fresh start!
But wait…part of that “post-game wrap up” I have with my Clients after their “Meeting of Creditors” is about how to rebuild their credit. As I point out elsewhere, with just a little good planning, your credit can be rebuilt to a level that would be considered “good” before the 1st year after your bankruptcy is up.