The need for federal laws governing bankruptcy have been part of our reality since the first federal bankruptcy act in 1800. The modern law of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) is the bankruptcy law of our time.
Our current bankruptcy laws are still in line with our American values to obtain a fresh start when we have financial distress, and to protect us from losing the assets that we need for that fresh start. If you need to save your home from foreclosure, your car from being repossessed, stop law suits, garnishments, tax levies, harassing phone calls and threating letters, we can assist you with a free 30-minute bankruptcy consultation to determine if you are eligible for bankruptcy, and which bankruptcy chapter will help you best achieve that fresh start to get you back on track to achieving your financial goals.
There are two types of consumer bankruptcies that are named after the chapters in the bankruptcy code where they are defined. The most familiar one is a Chapter 7 bankruptcy which is a discharge of all debt and a fresh start. Under modern bankruptcy law you must be below the median state income for a family of your particular size in order to qualify for this discharge. It may be necessary to determine this by performing an analysis known as a means test. Once you have qualified for a Chapter 7 you can discharge most of your debts and retain your assets. There are exceptions to the discharge, for example student loans and recent tax liabilities. However, if a Chapter 7 bankruptcy is not the solution to your financial issues then you may require a reorganization under a Chapter 13 bankruptcy.
If you are seeking to save your home from a foreclosure and you do not have the funds to pay all of the back payments, late charges, and other fees that the mortgage company is demanding, then a Chapter 13 bankruptcy may be the solution. There are two methods in a Chapter 13 to save your home. The first is the traditional repayment plan on the past amount due spread over up to five years while still making your regular monthly mortgage payment. The second is a modification under the new Mortgage Modification Mediation Program (MMM) which modifies the loan and gives you a single monthly mortgage payment. This is a very helpful program since you only need to make the single monthly plan payment which would include your regular monthly mortgage payment.
You can also reduce or pay off completely any tax debts you have in a Chapter 13 bankruptcy.
Either way, if you are in financial distress, bankruptcy may be a viable option to solve these issues and begin with a fresh start as was thought of by our founding fathers when they created our great nation.