How to decides between Chapter 7 or Chapter 13 bankruptcy?

May 11, 2015

 

Many clients come to our office, for a free consultation, and already have in their mind that they want to file for a Chapter 7 rather than a Chapter 13 bankruptcy.  Realistically, how would you know without a thorough understanding of all bankruptcy laws, rules and local practices?  The answer is, you really don't always know what's best in your specific circumstances.  Many things need to be considered.  The following is a very non-exhaustive list of the factors utilized by our experienced bankruptcy attorneys before our informed opinion is explained to you:

1)     Is the debtor a homeowner or a renter?  If a homeowner, how many mortgages on the property, are they current and what is the payoff on each of those mortgages?  Can the non-primary mortgage be removed and treated as an unsecured debt?  Is there a realistic chance of obtaining a loan modification?

2)     Does the debtor have any other non-homestead property?  Can anything be done to protect its equity?  Can any of the mortgages be removed and/or reduced?

3)     What equity, if any, do the vehicles the debtor owns have?  Can anything be done to protect its equity?  Can any of the amount owed be reduced? Can the interest rate be reduced?

4)     Does the debtor owe the IRS for prior years taxes?  Can any of these taxes be eliminated or paid back interest and penalty free?

Depending on the answers to these and many, many, other questions an experienced attorney can recommend the proper chapter to file, or we may recommend not to file (at least not right away).

Our attorneys have over 50 years of bankruptcy experience.  Call us, (305) 826-1774 for a FREE CONSULTATION.

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