Chapter 7 Bankruptcy, also called straight bankruptcy, is a liquidation proceeding. In Chapter 7, a debtor (party who owes a debt) turns over all non-exempt property to a bankruptcy trustee, who then converts the property to cash so it can be distributed to the debtor's creditors (parties who are owed money).
Chapter 13 Bankruptcy, also known as a reorganization bankruptcy or a wage earner's plan, may be filed by individuals who want to pay off their debts. In a Chapter 13 bankruptcy reorganization, individuals may protect and keep non-exempt property then have three to five years to pay off their debts under the repayment plan.
A foreclosure is the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments. Foreclosure is what happens when a homeowner fails to pay the mortgage. More specifically, it's a legal process by which the owner forfeits all rights to the property. If the owner can't pay off the outstanding debt, or sell the property via short sale, the property then goes to a foreclosure auction.
Generally speaking, the only way to stop a foreclosure to save your home through bankruptcy is through a Chapter 13 bankruptcy. A Chapter 13 bankruptcy can be filed at any time prior to the date of the foreclosure sale, and it is often the only avenue to save your home from foreclosure. Consultation with an attorney to determine if this is a feasible option for you is critical.
Chapter 13 bankruptcy is a means to avoid a repossession or force the return of a vehicle after repossession.
Repossession is the taking back of an item that has been sold on credit and delivered to the purchaser because there has been a default. This generally occurs where personal property, such as a car or motorcycle, is taken back by the creditor due to missed payments. On top of damaging your credit, creditors will generally sell the repossessed item. To the extent that they do not receive the full amount owing, they can try to collect the difference from you.
Without a bankruptcy, typically the only way to get a card back is to pay the amount owing to the creditor including all missed payments, late fees, and charges, in one lump sum. Practically speaking, most borrowers are generally unable to come up with those types of funds. As a result, filing a Chapter 13 bankruptcy case may be the only avenue for you to re-obtain your vehicle or obtain relief form a threat of repossession. A Chapter 13 bankruptcy can be filed at any time prior to the creditor selling the repossessed item. With the filing, you are entitled to retrieve your vehicle. If your car, motorcycle, or other personal property has been seized, consultation with an attorney to determine if this is a feasible option for you is critical.
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