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Overviews of Various Chapters of the Bankruptcy Code

The Bankruptcy Code, or law,  provides individuals with the right to file under three different Chapters of the Bankruptcy Code: Chapter 7, Chapter 13, and Chapter 11.

A Chapter 7 case is referred to as a liquidation case.

A Chapter 13 case is referred to as a wage earners reorganization case.

A Chapter 11 case is a reorganization for debtors, usually businesses, who have too much debt to qualify for a Chapter 13 case.
 

Watch our video below for a detailed, understandable description of the various types of bankruptcies:

                                                                                    

YOU CAN KEEP YOUR CAR!

When you buy a car, the creditor usually places a lien on the title until it is paid in full.  A lien on a car can survive bankruptcy just like a mortgage on real estate.  This means that the personal obligation can be discharged, but not the creditor's lien on the vehicle.

If arrangements are not made, the creditor may be able to repossess the car post-bankruptcy when you are behind on payments. The Debtor usually has several options pursuant to the Bankruptcy Code for keeping a car through bankruptcy:

REAFFIRMATION AGREEMENTS:  This is an agreement between a creditor and debtor that allows the debt to survive as if a bankruptcy was never filed.  If you sign a Reaffirmation Agreement and later default, the creditor's rights after bankruptcy are the same as before bankruptcy.  In other words, the debt can be collected via lawsuit, garnishment or other means.  We will counsel you on whether a Reaffirmation Agreement would be in your best interests, but it is ultimately your decision whether you choose to reaffirm the debt.

REDEMPTION:   A redemption allows a debtor to pay the secured creditor only the value of the asset instead of the balance owed. However, this must usually be done in a lump sum payment.  Even though redemption is not available for all types of property, it is usually used with respect to cars or other personal property.

SURRENDER:   Generally, if you surrender the car or other collateral, the creditor sells it and applies the funds received to any debt you owe.  If there is a balance remaining, this is called a 'deficiency,' and this becomes an unsecured debt that is discharged.

For more information about how to keep your vehicles or other secured personal property, please contact us and we will be happy to discuss your situation with you.


YOU CAN KEEP YOUR HOME!

Just as a lien remains on the title of a car, so too does a mortgage remain on real estate.  Even though your personal obligation to pay a mortgage is discharged, the mortgage lender's lien still remains on the property.  If a debtor does not make timely arrangements, the mortgage lender may have the rights to foreclose on the property.

Glenn E. Forbes is one of the leading consumer bankruptcy attorneys in northeastern Ohio, and helping debtors keep their home is one of many legal concerns that he helps his clients resolve.  Keeping a home under Chapter 7 and Chapter 13 involves different circumstances and requires different legal techniques;  contact us to find out how.
 
We also offer representation in foreclosure matters, loan modifications and mediation involving our debtors' real estate.  Please contact us for more information.