At Aguwa & Metu, P.C., we’ll work with you through every step of the process to obtain a fresh financial start. We can help evaluate your legal options and obtain a fair resolution.
Bankruptcy law provides a debtor who is unable to meet most or all of their financial obligations an opportunity to eliminate some or all of their debt burden. The debtor files a petition for bankruptcy in the United States Bankruptcy Court in the district where they reside, as the process is governed by federal law.
When the bankruptcy is granted, a discharge is ordered by the court and the debtor does not have to pay some or all of their debts. In order for a debt to be discharged, it must be listed on the petition.
The discharge only applies to debts that arose before the date the petition was filed. Therefore, it is important to accurately list all of your debts, as you can’t be discharged from a debt that is not listed on the bankruptcy petition.
Note that not all debts can be discharged, and non-dischargeable debts include but are not limited to the following:
A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. Its effect is to erase unsecured debts such as medical bills, credit cards, unsecured loans and utility bills. This is the most common form of bankruptcy. A court-appointed trustee collects the non-exempt property of the debtor, sells the property and distributes the proceeds to the creditors.
A Chapter 13 bankruptcy is essentially a payment plan through which you pay back all or most of your debts to creditors. This type of bankruptcy is called a reorganization bankruptcy. Most debtors file this type of bankruptcy petition when they have substantial assets, such as a house they wish to keep. A Chapter 13 bankruptcy spreads out the time you have to repay your creditors. It can take three to five years to complete the bankruptcy process. After you have made all the payments under the plan, you receive a discharge of your debts.
A Chapter 11 bankruptcy is usually used by businesses. Under a Chapter 11 bankruptcy, you are able to continue to operate your business with a court-approved plan to repay your creditors.