The Law and Your Rights

Bankruptcy is a fundamental Constitutional right. Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies” for the benefit of debtors. Bankruptcy is a legal solution that helps consumers successfully get the fresh start they need. Did you know that you may be able to restore bad credit faster by filing bankruptcy? Did you know that you may be able to keep many of your personal possessions while discharging your debts? When you are struggling to overcome debt, know that you are not alone. The Law Offices of Craig Feldman, we provide the counsel, strategy and experienced legal advocacy you need to protect your rights and achieve debt relief.

Types of Bankruptcy

Chapter 7

In a Chapter 7 proceeding, the Debtor can discharge all of his/her unsecured debts, while the secured debt remains unchanged. A Trustee is appointed to collect non-exempt or unprotected assets of the debtor's estate, reduce them to cash, and distribute the net proceeds to creditors, subject to the Debtor's right to retain certain "exempt" property and the rights of secured creditors. An objection to discharge may be filed by the Trustee or a creditor within 60 days following the first Meeting of Creditors. If no objections are filed, then the Debtor will normally receive a "discharge" upon the expiration of the 60 day period. Upon the filing of the petition, the Debtor is protected from lawsuits, garnishments, and other creditor actions through an "automatic stay". A business entity is not granted a discharge, but is expected to dissolve by operation of law.

Chapter 13

A Chapter 13 case has five stages:

  • An individual debtor files a petition. Only the debtor can file a Chapter 13 petition. The debtor files a plan providing for payments to creditors. The code does not require that the plan provide for full payment to creditors; however, the plan must provide creditors the same amount of money in which they would receive in a Chapter 7 liquidation proceeding
  • The court reviews and determines whether the plan meets the requirements for confirmation of the plan
  • After confirmation, the debtor makes the payments called for by the plan
  • The debtor receives a discharge
  • Finally, one of the key advantages of filing a Chapter 13 is that the debtor can pay most non-dischargeable federal taxes over the term of the Chapter 13 plan without interest.

Debtors are only eligible if they fall below certain statutory limitations in the amounts of secured and unsecured non-contingent, liquidated debt. In a Chapter 13 proceeding, the Debtor's assets are not liquidated and the Debtor can restructure his/her secured debts and pay less than 100% of any unsecured debts in whole or part, through a statutory plan over a period of usually 3 to 5 years. The Creditors do not vote on the plan; however, the Debtor(s) work closely with the creditors and the Trustee in designing the repayment Plan. The Debtor goes to a "confirmation hearing", where the court either approves or disapproves the plan. Even though the Debtor has control over his/her assets, a Trustee is appointed who oversees the repayment by making the payments to the creditors pursuant to the confirmed plan. The Debtor is required to complete the payments under the plan prior to receiving a "discharge". The Debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect in order to give the Debtor(s) the opportunity to resolve the financial difficulties facing the Debtor(s). Chapter 13 bankruptcy procedures are commonly used to stop repossession, foreclosures and bring home loans current, and/or to repay IRS or real estate taxes over time at interest rates usually less than those charged by the taxing authorities.