The Bankruptcy Process
The first step in the bankruptcy process is determining that there is a financial problem. Normally, financial problems can be broken down into 3 main categories: (1) Potential Foreclosure on Home, (2) Potential Repossession of Vehicle, and (3) Simply just overwhelmed with credit card debt, medical bills, tax debt, finance company debt and other unsecured bills. In this situation, the family can pay for the house/rent and the car(s), but can not pay these other expenses. Calling and making an appointment to meet with an attorney at the firm to discuss your options begins the process of regaining control of your life.
The next step is to determine if you qualify for either a Chapter 13 bankruptcy or a Chapter 7 bankruptcy. Chapter 13 bankruptcy is debt consolidation. Basically, all your debts are filed with the Bankruptcy Court, and a Chapter 13 Trustee is assigned to your case. A monthly payment will be calculated at the firm and will be filed within a Chapter 13 plan.
The easiest way to explain Chapter 13 is by example: Say you have a car that you are paying $15,000 for with payments of $350 per month, furniture for $2,000 with payments of $75 per month, and credit card and medical bills that total over $25,000.00. If you filed a Chapter 13 case, the attorneys would file a Chapter 13 case listing the debt and a Chapter 13 Plan that would tell the creditors that you are combining all the debt and will begin making a payment of $375 per month to the Trustee to take care of your car, your furniture and all your unsecured bills. So, basically, you are now paying for all your debt for less than what your car payment and furniture payments were prior to filing.
Now, taking the same example, a client could determine that he or she can make the car note and the furniture payment, but simply can not pay for the other bills. At that point, a Chapter 7 case would be recommended. A client can keep his house, keep his car, keep his furniture by continuing to make the payments and Discharge the unsecured debt. The client will sign reaffirmation agreements with their mortgage company, their car company and/or furniture company and will be bound by the original terms of the contract. The unsecured debt will be wiped out upon Discharge. And, in a Chapter 7 case, a client could decide to surrender a house, car, or furniture, and the client would have no liability for the debts.
The attorney fees for Chapter 13 cases are generally paid within the Chapter 13 plan. In Chapter 7 cases, our firm will set up payment arrangements with the client that will fit within their budget. There is a filing fee of $274 for Chapter 13 cases and a filing fee of $299 for Chapter 7 cases that are charged by the Bankruptcy Clerk of Court. In Chapter 13 cases, in some situation where a client does not have the filing fee, it can also be paid within the Chapter 13 plan and the client can file the case with $0. In almost all Chapter 7 cases, the $299 filing fee must be paid before the case can be filed.
Generally, you will have two court hearings for a Chapter 13 case and one court hearing for a Chapter 7 case. An attorney from the firm will be with the client at the initial meeting, at the signing of the paperwork, and at all court hearings. You will not be meeting with a secretary or a paralegal at this law firm. You pay for an attorney, and an attorney is what you will have with you during all these proceedings.