Deciding to file for bankruptcy can be difficult. It can also be a fresh start toward a new

life. The type of bankruptcy that is best for you depends upon your individual situation.

To learn some of the basics about the different types of bankruptcy and how they work, please read on. To discuss filing bankruptcy with a bankruptcy attorney, please fill in the Free, No Obligation Evaluation Form. You will be contacted by a local bankruptcy attorney who will talk with you and help you evaluate the best course of action for your specific situation.

Just taking these first steps will help you feel better, and will help you take control of your financial future.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is for individuals who:

• Can no longer pay their basic living expenses; and
• Do not have significant, or any, equity in any real property or personal property; and
• Wish to have creditors stop coming after them for money they do not have.

In Chapter 7 Bankruptcy, you are seeking to have the Bankruptcy Court order creditors to stop debt collecting and to dismiss your unsecured debts. Unsecured debts are debts that are not tied to any item of property. It is where the creditor has no right to take any property in place of payment for the debt. Clothing or dishes would be examples of unsecured debt.

Chapter 7 Bankruptcy will not dismiss all of your secured debts, such as a loan on a house where the loan payment is “secured” by the house itself. In Chapter 7 Bankruptcy, the house may be foreclosed upon and/or sold by the creditor to obtain payment for the loan.

Chapter 7 Bankruptcy is fairly simple and straightforward. It can be completed in as little as a few months. The amount of time depends upon the amount of assets involved and the court’s calendar and other circumstances.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is for individuals who:

• Have significant equity in their home, or other properties, and do not want to lose them; and
• Are able to consistently pay for regular living expenses, but cannot consistently pay for additional debts they have taken on

In Chapter 13 Bankruptcy, a Bankruptcy Trustee will be assigned to work out a payment plan with you and your creditors allowing you to keep as many of your assets as possible. Generally, you will have three to five years to pay back all, or a portion of your past due accounts that you all agree upon. You pay the trustee, and the trustee pays your creditors so you no longer have to deal with them directly.

These are some of the basics of chapter 7 and chapter 13 bankruptcies. As you know, each person or families circumstances are going to be different. Your next step is to fill out the Free, No Obligation Evaluation Form. You will be contacted by a local bankruptcy attorney who will talk with you and help you evaluate the best course of action for your specific situation.

How the Bankruptcy Automatic Stay Is Designed to Stop Foreclosure

When you file bankruptcy – whether Chapter 7 or Chapter 13 – the automatic stay kicks in.
The automatic stay is a court order that puts an immediate stop to all collection actions. Bankruptcy courts consider foreclosure a type of collection, along with:

•Phone calls
•Bills
•Wage garnishment
•Repossession
This protection kicks in the moment you file, and lasts for the duration of your bankruptcy case.
In the case of a Chapter 13 bankruptcy, this protection may be extended for several years. After bankruptcy, your mortgage debts should be up to date and settled and you shouldn’t need the protection of the automatic stay.
This powerful tool should be there to use only for when you need it the most: When you are on the verge of losing your home, and your debt is out of control.

Bankruptcy Provides Long Term Foreclosure Help, Too

Once you are in bankruptcy, depending on whether you file Chapter 7 or Chapter 13, the long term safety of your home will be addressed.
Chapter 13 bankruptcy laws contain strong home protections. In these cases, you may include your back mortgage debt along with other debts like car loans and credit card bills. All of your debts will be combined and ordered.
Then, instead of trying to keep up with mounting fees and several creditors, you’ll make one monthly payment to a bankruptcy trustee. Over the course of a court-approved repayment schedule, you can work to clear away your old debts in 3-5 years. During this time you should be protected by the automatic stay, and when you finish your repayment plan, your debts may be settled.
Chapter 7 bankruptcy is designed to eliminate unsecured debts, like medical and credit card bills. You may not include a home mortgage in this filing, but you may still be able to protect your home from foreclosure.
The automatic stay applies in Chapter 7 just as it does in Chapter 13. But because these cases are typically shorter, you’ll want to examine your state’s bankruptcy exemptions.
Chapter 7 exemptions vary by state, and outline property that is fully protected from a sale during a Chapter 7 case. In some states, these protections may extend to homes worth several hundred thousand dollars. If your house falls under the exemptions, then you should be protected from both foreclosure and the very rare Chapter 7 sale.

Get Foreclosure Answers With a Bankruptcy Lawyer

Bankruptcy provides foreclosure help in many different ways. But just like each home is unique, so is each bankruptcy case. Speak with a local bankruptcy lawyer for advice on how you can stop foreclosure and protect your home, by filing for bankruptcy. An attorney can answer your questions about how the laws in your state will affect your home and your debt.

The Bankruptcy Means Test

The bankruptcy means test, as it is known, was part of the new bankruptcy laws of 2005. In order to file Chapter 7, you’ll need to pass the means test.
The good news is, the means test is not an actual exam. It is a measurement of “true need,” and a bankruptcy lawyer can take you through the test and, in short order, let you know if you qualify.
Basically, it works by taking into account your income, your debt and the size of your family, to determine if you truly do need Chapter 7 bankruptcy.
This may sound intimidating, but it’s not designed to be the roadblock it may seem. The means test is in place to prevent people from taking advantage of the system. That’s a testament to the power of Chapter 7 bankruptcy.

How the bankruptcy means test works

While the specifics of the means test vary from state-to-state, the workings are the same.
Generally speaking, if you earn less than the median annual income in your state, you should qualify for Chapter 7 bankruptcy.
The median income is the center-line of all annual incomes in the state. It is unique to each state, and includes different income levels based on the size of your family. For example, for means test purposes, the median income for a family of four is typically higher than that for a family of two.
Also, the median income for the means test changes every year in every state.
This may sound like a high bar, but more people may qualify than you think. In most states, the median income for 2009 was between $40,000 and 50,000 for a single earner. For a four-person family, the median income was above $70,000 for many states in 2009.
To find out if you qualify for Chapter 7 bankruptcy, and to learn more about how filing for bankruptcy can impact your debt, speak with a local bankruptcy lawyer.

Times are tough. If you’ve fallen behind on your mortgage payments, you’re certainly not alone in your struggle. In fact, a foreclosure occurs every 13 seconds in the United States, according to The Center for Responsible Lending. But just because you may be facing bankruptcy, it doesn’t necessarily mean that you must lose your home to foreclosure. If you act quickly, you’ll likely have debt-relief options that could help protect your home. One of those debt-relief options may be filing Chapter 13 Bankruptcy.

How Does Bankruptcy Stop Foreclosure?

When a person files for bankruptcy, the automatic stay typically goes into effect right away.
Under the stay, creditors are court-ordered to stop all collection efforts, which include:
• foreclosure
• repossession
• some lawsuits
• most wage garnishments
• harassing phone calls & letters

Millions of Americans with money problems, and facing foreclosure on their home, have sought the protection of the automatic stay, and filed Chapter 13 bankruptcy to save their homes.

Chapter 13 Bankruptcy Basics

Chapter 13 bankruptcy is typically referred to as reorganization bankruptcy because it helps debtors by placing them on a realistic repayment plan. The plan is structured so they can repay their past due amounts while staying current on their other bills. Under Chapter 13, filers make one lower monthly payment directly to the bankruptcy court, and there is zero contact with creditors.
The Chapter 13 repayment plan generally lasts between three and five years and may be a good option for people who have regular income but are struggling to keep up with scheduled debt payments.

Chapter 13 Eligibility

Not everyone qualifies to file Chapter 13 bankruptcy. Typically, a debtor will qualify if he or she:
• has steady income and is able to pay for basic living expenses
• has debt amounts that fall between the acceptable limits established for secured and unsecured debts. (These limits are periodically updated and a lawyer can let you know what the exact limits are.)
Keep in mind, if you don’t qualify for Chapter 13, you may still be eligible to file Chapter 7 bankruptcy, which may also stop foreclosure proceedings. Talk to a local bankruptcy lawyer today about your debt-relief options.

The free, no-obligation evaluation, that is found on FilingBankruptcy.org, can be used to gain access to an attorney in your area. It is important to speak with a local attorney about your specific financial situation, before making any decisions.