Liquidation
A Chapter 7 bankruptcy involves the surrender of your non-exempt property in exchange for the cancellation of most of your debts. In many consumer cases, all of the debtor’s property can be claimed as exempt. This means that, if all your property is exempt, then a Chapter 7 bankruptcy may allow you to cancel most of your debts without losing any of your property.

Debt Reorganization
A Chapter 13 bankruptcy allows you to repay your debts over time and keep certain non-exempt property that might have been surrendered in a Chapter 7 case. In addition to retaining your non-exempt property, Chapter 13 may allow you to repay certain debts under more favorable terms, stop a foreclosure or repossession, and cure a pre-petition default.

Foreclosures
Trying to save your home from foreclosure can be a daunting task. While bankruptcy is one option that should be considered, there are other legal defenses that may help you keep your home. Both federal and state law provide possible grounds to challenge a foreclosure.

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If you are having trouble paying your debts, then bankruptcy is one option that should be considered. However, it is important to understand at the outset the kinds of relief that bankruptcy can provide.

What Bankruptcy Can Do:

  • Eliminate the legal obligation to pay most debts
  • Stop foreclosure on a home and allow an opportunity to cure a default
  • Prevent reposession of an automobile, or require creditor to return a repossessed automobile
  • Prevent termination of utility service, or restore service if it has already been terminated
  • Lower monthly payments for some debts which are not eliminated

What Bankruptcy Cannot Do:

  • Modify certain rights of secured creditors
  • Eliminate some debts for child support, alimony, criminal penalties, and most taxes
  • Eliminate debts incurred after bankruptcy has been filed
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