Bankruptcy Made Simple


The two types of bankruptcy that most people hear about are chapter 7 and chapter 13. The word chapter refers to the chapter (like in a book) in the bankruptcy code. Chapter 7 is a liquidating bankruptcy and chapter 13 is a non-liquidating bankruptcy. Liquidating means they (the government) can take your stuff. Non-liquidating means they can’t. However, there are exceptions to this. I will try to lay this out in a simple fashion:

In a chapter 7 you will be able to discharge all of your debts without paying anything back. However, if you have any equity in anything (your home, your car, your bank account, your boat- anything) you must surrender it to the bankruptcy trustee (the person who looks out for the creditors) so that it can be sold (liquidated) to pay back the creditors to the largest extent possible. Equity is what determines which chapter of bankruptcy you can file under. Fair Market Value minus Amount Owed equals Your Equity in anything.

A chapter 13 is a non-liquidating bankruptcy. This means you get to keep everything but you have to pay back a percentage of your debt. It is also used for people who are in foreclosure or behind on their mortgage and in fear of foreclosure. A chapter 13 requires a payback plan from between three to five years. The payment is monthly. The amount is determined, again, by the amount of non-exempt equity you have accumulated in your life. This is referred to as your bankruptcy estate. Obviously, everyone wants to do a chapter 7 because it is no pay back. However, since 2005 it has become much harder to file chapter 7. In 2005, legislation was passed which tightened up the income restrictions on people with regard to the Chapter 7 bankruptcy. The intended result was that more people must file under Chapter 13 of the Bankruptcy code and pay back, at least, what the government thinks they can afford.

It is the bankruptcy attorney’s job to advise you which is the best chapter to file under. It is also the attorney’s job to make sure you keep your home, your car, and everything else you have accumulated throughout your life. At Biales Delchin we concentrate in the area of bankruptcy. Our practice is dedicated to helping people resolve their financial problems in an honorable and dignified manner. We understand how hard it is for people to take this step. We are sensitive to the pain, despair, sense of failure and humiliation many feel for being in this situation. We are dedicated to educate our clients in a compassionate, caring and sensitive manner as to why it is an act of love to yourself and your family to file bankruptcy; that it is a constitutional right to file bankruptcy and that you are not only helping yourself and your loved ones but that you are actually helping the economy and your country by doing so in most cases (that is why it was created by the Constitution as a power granted to Congress). Some of the most honorable people in U.S. history have had to file bankruptcy. Abraham Lincoln filed bankruptcy; so did Thomas Jefferson and Ulysses S. Grant. It did not affect their contributions to society or malign their names. Bankruptcy- if needed- is good. Anybody who thinks or says otherwise has never been in life and sanity threatening financial distress; they have never suffered unending merciless harassment, letters and phone calls by bill collectors. Like all finger pointers and naysayers, they are ignorant.

If you are in this situation, I would encourage you to come in for a free completely confidential initial consultation for a detailed and compassionate evaluation of what can be done to help you. There is absolutely no obligation or pressure to hire us. You will not be asked to give us money or sign anything and no one will ever know that you came. We are legally bound to the highest level of confidentiality in these cases. If you decide bankruptcy is right for you we’ll put you on an affordable payment plan. We will get the bill collectors off your back immediately. We will protect you from lawsuits, garnishments and other collection activity. We will see to it that, if possible, you keep your car, home and all of your other property. Bankruptcy is a tool that can give you peace of mind and give you a fresh start in life.

Robert C. Biales

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