How Will Filing For Bankruptcy Affect Me?

What is a Chapter 7? A Chapter 7 filing is when all unsecured debt is discharged. For example, unsecured debt would include some of the following: credit cards, medical bills and personal loans.

What is a Chapter 13? A Chapter 13 is a reorganizational plan wherein a consumer keeps assets and makes an arrangement with the creditor to pay their debts within a three to five year period.

Is filing for a Chapter 13 difficult based on the Bankruptcy Abuse and Consumer Protection Act? Yes. A person in debt must pay their unsecured debt in full including the interest.

If the person does not pay the unsecured debt in full including the interest, the person's income which is disposable, must be contributed to the plan for the minimum term of up to five years.

What are some of the other requirements fo the Bankruptcy Abuse and Consumer Protection Act? Mandatory credit counseling is required before and after the consumer files for bankruptcy and proof of income must be shown by a consumer by providing a copy of the latest federal tax return filed.

Is there anything else I need to know about the Bankruptcy Abuse and Consumer Protection Act? Yes. This law may not eliminate how the automatic stay is used. The automatic stay under the old bankruptcy law is used to stop most of the actions of collectors and persons filing lawsuits against a debtor who files for bankruptcy.

However, under Bankruptcy Abuse and Consumer Protection Act, filing for bankruptcy will not stop you from being evicted, suspension/restriction of your driver's license, or lawsuits being filed against you.

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How To Avoid Bankruptcy

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