If you’re considering filing for bankruptcy, it is vital that you understand the process. To help you gain an understanding of the different aspects of bankruptcy, take a look at this list of terms:
An automatic stay is the first thing that happens in any bankruptcy case. As soon as the bankruptcy filer submits his petition to the clerk of the court, the automatic stay begins, and creditors can no longer take any action against him. Wage garnishments must cease, and creditors cannot contact the debtor to discuss payment of debt. The stay lasts throughout the bankruptcy process.
After the bankruptcy process is complete and creditors have received as much payment as possible, filers receive a debt discharge releasing them from responsibility for their unsecured debts. Creditors can no longer attempt to collect these debts from the bankruptcy filer.
Bankruptcy will discharge unsecured debts, or debts not tied to property. These include personal loans, credit cards, and medical bills. During the bankruptcy process, filers will pay as much of these debts as possible, then be released from responsibility for them at the end of the process.
Secured debts are tied to property, like car loans and home mortgages. In Chapter 7 bankruptcy, the filer has the option of discharging these debts and forfeiting the property or reaffirming the loan and continuing to pay it. In Chapter 13 bankruptcy, filers must make up any missed payments and stay current on new payments, or they will risk losing the property.
This evaluation of a bankruptcy filer’s income determines whether he is eligible to file Chapter 7 or Chapter 13 bankruptcy. To file Chapter 7, a debtor must have income below a certain level, which varies from state to state, or have very little disposable income.
If you’re considering bankruptcy, you need experienced Milwaukee bankruptcy attorney to make sure you understand your options. Call (262) 827-0375 to schedule a free consultation with Burr Law Office.