By Aaron Swimmer

There are several types of bankruptcy, the familiar liquidation bankruptcy, where your individual debts are wiped out – Chapter 7, and “reorganization” bankruptcy, where you partially or fully repay your individual debts – Chapter 13, or Chapter 11 – for businesses and for individuals with debts over $1 million.
Filing for bankruptcy immediately stops your creditors from trying to collect. Creditors cannot garnish your wages, empty your bank account or go after your car or house. Until your bankruptcy case ends, your financial problems are in the hands of the court.

Chapter 7 bankruptcy cancels all or most of your debts. In exchange, you might have to surrender some property. Bankruptcy is geared toward the honest debtor who got in too deep and needs the help of the bankruptcy court to get a fresh start. If you expect to incur more debts for necessities, such as additional medical costs because of an existing illness, consider delaying filing for bankruptcy. Debts you incur after you file will not be discharged.

Certain debts cannot be discharged in Chapter 7 bankruptcy. In general, they are back child support, alimony, student loans, court-ordered restitution, income taxes less than three years past due, court judgments for injuries or death to someone arising from your intoxicated driving, debts incurred on the basis of fraud, debts from willful or malicious injury to another or another’s property, debts from theft and debts under a divorce settlement.

Generally, in a Chapter 7 you may be able to keep a motor vehicle, clothing, furnishings, goods and appliances, personal effects, life insurance, pensions, part of the equity in your home, tools of your trade or profession, portion of unpaid wages, welfare, Social Security and unemployment compensation. If you’ve pledged property for a loan you will either have to surrender the property to the creditor or make arrangements to pay for it.

Swimmer Law Associates, P.A., is experienced in bankruptcy issues. Should you need advice about your situation, feel free to give us a call.