Frequently Asked Questions, part 1.

Our clients often come to our office with several questions about bankruptcy, whether they be about the steps, the cost of filing bankruptcy, the time it takes to complete the process, or something else entirely. Here at Kight Law Office, we’ve compiled some of the answers to the questions we hear most frequently in an attempt to help you better understand the bankruptcy filing process. In part one of our FAQ series, we’ll address some of the common questions we receive about what bankruptcy is and how it works. You can always contact us if you have questions that aren’t answered here or would like clarification of anything you see here.

1.) What is Bankruptcy?

Bankruptcy is a legal process for obtaining relief from creditors. This is done by filing a petition in federal bankruptcy court under the United States Bankruptcy Code. There are several types of bankruptcy, but most consumer debtors seek relief under either Chapter 7 or Chapter 13.

2.) How do you know when you need to file Bankruptcy?

If you are saddled with too much debt to be able to meet your monthly obligations and it is unlikely that your situation will change or improve in the near future, bankruptcy may be an appropriate way for you to find relief that will enable you to make a fresh start, free from an otherwise unmanageable financial burden.

3.) What is the difference between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy?

Chapter 7 Bankruptcy allows individuals to discharge (get rid of) certain debts, and it protects them from harassment by their creditors. It is intended to give relief to people who do not have enough disposable income to pay toward any of their debts. In general, Chapter 7 bankruptcy is an appropriate choice for a debtor who has little property or little-to-no equity in property and whose financial circumstances are such that the debtor would be unable to repay the debt through a repayment plan.

Chapter 13 Bankruptcy is for persons who are able to pay their creditors part, but not all, of what is owed. It allows them to reorganize their debts by making monthly payments from their disposable income under a payment plan approved by the court. After your payment plan is approved by the court, you will make monthly payments to your trustee, who is assigned by the court and distributes your payments among the creditors. Your approved payment plan’s duration will be either three or five years and is determined based on your income. Once all payments required under the plan have been made, you are generally entitled to a discharge, which releases you from all dischargeable debts provided for in the plan. Non-dischargeable debts would include debts incurred through fraud, certain delinquent taxes, child support and alimony obligations, certain educational loans, and homeowners association dues incurred after the filing of the petition, among others. The debtor will be obligated to pay nondischargeable debts even after receiving a general discharge through bankruptcy.

4.) How do I know which is right for me?
You can determine which type of bankruptcy is right for you by meeting with a lawyer for a consultation. In that consultation, your lawyer will consider your income, the property you own and the equity you hold in that property, and whether you desire and are able to repay your debts through Chapter 13 to determine what is best for you.

5.) How do I schedule a consultation with Kight Law Office?
If you’d like to schedule a no-obligation consultation to discuss bankruptcy, or even just determine your options, you can do so by emailing us at info@kightlaw.com or by calling our office at 828-255-9881. Our paralegals, Courtney and Terri, are available from 8:30 until 5:30, Monday through Friday.

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