Types of Bankruptcy

Chapter 7 Bankruptcy

This is the most common type of bankruptcy for individuals.  It wipes out credit card debt, medical bills, personal loans and the like. The advantage of a Chapter 7 is that it is fast and straightforward for most people.  The process typically lasts about four months from start to finish.  As with all bankruptcies, the minute the case is filed, all collection actions stop, and you will be free of collection notices, calls and lawsuits.  If you are making car payments or lease payments, Chapter 7 allows you to decide if you want to keep your car or not.  If you want to keep it, you will have to pay for it, if you don’t, you can give the car back and be free of the payments.  You will keep your house or apartment if you keep making the payments on those.  Here are some frequently asked questions about Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

A Chapter 13 installment reorganization is a type of bankruptcy where you repay debts over time.  It allows you to reorganize your finances. The chapter 13 type of bankruptcy is for people who can afford their regular monthly living expenses, but who have missing house payments or credit cards that they cannot afford to pay off right away.

There are two major benefits of the chapter 13 installment repayment plan:

  • If you have a second mortgage on your home, and the home has declined in value significantly, the installment reorganization can allow you to payoff your second mortgage for pennies on the dollar, and at ZERO percent interest.  More information here on paying off your second mortgage in an installment plan.

The amount that you have to repay over time is based on what you can afford to pay.  We will formulate a monthly budget for you based on what your expenses are, and figure out how much extra money is available to contribute as a monthly payment towards your unpaid bills. You will make this monthly installment payment for a period of time, generally 36-60 months, or less depending on your ability to pay.  At the end of your time period, any debts not paid off in full from your installment payment go away forever!

Chapter 11 Bankruptcy

Most people hear about ‘Chapter 11′ in the news, because this is the type of bankruptcy that is usually filed by big corporations such as General Motors and Chrysler recently.  Chapter 11 is used by corporations to restructure their debt load.  It can also be used by people with very significant debts and high incomes, but it is not needed by most regular people.

I am Ryan Davies and I provide bankruptcy service for the southern California communities of Lake Forest, Rancho Santa Margarita, Laguna Niguel, Laguna Beach, Laguna Woods, Aliso Viejo, Mission Viejo, San Clemente, Irvine, Costa Mesa, Newport Beach, Tustin and Santa Ana.

To find out if Chapter 7 bankruptcy protection is available to you, go ahead and schedule a free consultation with me, your Orange County bankruptcy lawyer.

Contact me TODAY for a free legal consultation.