How Bankruptcy Helps
If you’re behind on mortgage payments, instead of waiting for the lender to foreclose–selling your home–you can file for bankruptcy and get immediate legal help. Chapter 7 bankruptcy and Chapter 13 bankruptcy can either stall the sale of your home until you can work out an arrangement with the  lender, or buy you time and cancel some of the outstanding 2nd and 3rd mortgages.

Cancel outstanding mortgage payments? It’s how Chapter 13 bankruptcy helps. Let’s go over the details.

Chapter 13 Bankruptcy Helps Stop Home Foreclosure
Chapter 13 bankruptcy is usually for those who will do anything to keep their home and buy themselves time to make arrangements. Chapter 7 bankruptcy is still worthwhile, but Chapter 13 bankruptcy is smart for Phoenix home owners who can’t stand the thought of losing their home.

Chapter 13 bankruptcy in Phoenix technically does not cancel any outstanding debts, but buys you several years to pay back the late, outstanding bills. You will need enough money to pay back your initial mortgage payment if you want to do this.

But, if you have 2nd and 3rd mortgages, you can cancel this debt by filing for Chapter 13 bankruptcy. It’s a common process if your 1st mortgage secured the entire value of your home.

Chapter 7 Bankruptcy and Home Foreclosure
Usually, Phoenix residents should consider getting professional counsel before filing for either Chapter 7 or Chapter 13 bankruptcy. Why? You need to decide the fate of all your major property. If you decided you simply can’t catch up with past due payment and you need to cancel debts, buy yourself some time, and move on, Chapter 7 bankruptcy can do just that. You won’t keep your home, but you’ll be allowed to live there for several months before you lose it, giving you time to find new residence.

The Process of Filing for Bankruptcy
As stated, you do need to decide what’s best for you. There are advantages to both Chapter 13 and Chapter 7 bankruptcy filing. A Phoenix bankruptcy attorney can not only help you save your home, but cancel many debts you have, buy you time on  payments, and/or help you plan for the future.

Chapter 7 bankruptcy is essentially a fresh start financially. Typically, most debts are discharged, you’re given a chance to get back on your feet, and you won’t be harassed by creditors.

However, there is the “fine print” part to a Chapter 7 bankruptcy hearing. This article highlights 6 things you need to know about Chapter 7 bankruptcy discharge. Professional counsel, a bankruptcy attorney in your area, can help with more than documentation and filing: they can also explain all the fine print in simple language.

1-What Discharge Means for Liability and Creditors
A Chapter 7 bankruptcy discharge releases you the debtor from liability for most of your debts, while also stopping collections against you by creditors. If you owe a creditor a large amount of money, they may still get some money, but only via the trustee selling nonexempt assets you have. They will have no basis for collecting past debts.

2-What Debts are Discharged
Typically, you need to talk with professional bankruptcy attorneys to help you with this part of Chapter 7 discharge. You can expect the majority of your debts to be discharged, but some of your assets may be too valuable and could be sold. For instance, if you live alone in your home valued well over $100,000, you lose it. There are ways around that, especially if you work with professional bankruptcy attorneys.

3-How Fast the Discharge Occurs
You can expect a fast discharge in most cases unless a party of interest–someone you owe money–objects to the discharge. This process is usually 60-90 days after filing Chapter 7 bankruptcy and meeting with the court.

4-Grounds for Rejection of Chapter 7 Bankruptcy
You can be rejected for discharge in Chapter 7 bankruptcy via a variety of means, depending on your particular situation. If you, for instance, failed to keep adequate financial records, couldn’t explain your loss of assets, or committed perjury, you can be denied discharge.

5-Secured Creditors
Secured creditors may still have the right to seize property in some cases. This is where counsel is most important. It gets complicated, but if you bought a car and made an outside agreement that you wanted to keep it, you could make payments on the debt. The creditor would have the right to repossess the car if you failed to make payments, even with the discharge.

6-What Debts Aren’t Discharged
You can’t be discharged of all outstanding debts. This includes alimony, child support, some taxes, debts for education or loans, debts for death or personal injury causes by by your motor vehicle, debts for injury to another person, and others.

As you can see, there’s a lot more that goes on in and out of the courtroom when it comes to certain laws involving Chapter 7 bankruptcy discharge. The best thing you can do is hire a professional Chapter 7 bankruptcy attorney in your state who can clear up all the fine print, protect you from failing to meet requirements, and help you get a fresh start.

The Price Law Group logo is an image of a person moving from the dark and into the light. This symbol illustrates how we think about the services we offer, and the whole experience of being a client at our firm.

We will use this blog to provide you with updates and news about bankruptcy, debt and building a life after debt. At Price Law Group we are dedicated to helping people in financial trouble understand their options, make choices and take actions that will help put their debt problems behind them. We are optimists, because we know that no matter how much financial trouble you may be in, there is a way out. There is a healthier financial life in your future.