In General
A bankruptcy is a federal court case which helps a person get rid of debt and resolve financial problems. A person who files for bankruptcy is called a “debtor.” A “creditor” is another person or company that the debtor owes money to. A “trustee” is a person appointed to help administer the case. This area explains how bankruptcy works for consumer debtors and for creditors.
Debtors usually file a chapter 7 or chapter 13 bankruptcy case. These two types of cases, described below, are alike in many ways. Both cases require a debtor to file lists of ALL debts (even those the debtor intends to keep paying) and ALL property of any kind that the debtor owns. They both require the debtor to attend a meeting early in the case to answer questions under oath asked by the trustee and by creditors. In a chapter 7 case the trustee sells whatever property the debtor does not keep (see What the Debtor Can Keep below), distributes the sale proceeds to creditors, and then closes the case. In a chapter 13 the trustee does not usually sell any property; instead, the debtor proposes a plan to use her or his wages or other income to repay some or all the debts over a three- to five-year period. During the case, the debtor pays her or his basic day-to-day living expenses as if the debtor were not in bankruptcy.
What the Debtor can keep:
The Debtor usually keeps all of her or his property. The debtor can keep certain property for herself or himself, called “exemptions.” These are the things that the debtor and the debtor’s family need in order to keep living; such as some money, clothes, household goods and furnishings, retirement funds, vehicles, a residence, and pets. (Note: This is not a complete list of everything a debtor can exempt.) Creditors may not take exempt property except for taxes, child support or alimony. The debtor also usually gets to keep her or his house and vehicle, as long as the debtor can keep making the monthly payments on the house and vehicle.
Bankruptcy is not a personal, emotional decision; it’s a financial decision based on your amount of debt, your income, and your present ability to repay debts. Everyone deserves to get their financial situations back on track and get bill collectors out of their lives.
Call 602-954-1300 to schedule an appointment for a free, no obligation, consultation with Ms. Bellomo, an experienced bankruptcy attorney.