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y works:

1. Eligibility: To qualify for Chapter 7 bankruptcy, you must pass a means test to determine if your income falls below a certain threshold. If you meet the criteria, you may be eligible to have your unsecured debts, such as credit card debt and medical bills, discharged.

2. Automatic Stay: Once you file for Chapter 7 bankruptcy, an automatic stay goes into effect, halting creditor actions such as foreclosure, repossession, and wage garnishment. This gives you a chance to catch your breath and work with your attorney to develop a plan for your financial future.

3. Liquidation of Assets: In Chapter 7 bankruptcy, a trustee may sell non-exempt assets to repay your creditors. However, many individuals are able to retain most, if not all, of their assets through exemptions provided by state and federal laws.

4. Discharge of Debts: At the end of the process, most of your unsecured debts are discharged, meaning you are no longer legally obligated to repay them. This can provide you with a fresh start and the opportunity to rebuild your financial life.

Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” is another option for individuals who have a regular income but are struggling with overwhelming debt. Here’s how Chapter 13 bankruptcy works:

1. Repayment Plan: In Chapter 13 bankruptcy, you work with your attorney to develop a repayment plan that allows you to pay back your debts over a period of three to five years. This plan is based on your income and expenses and may involve restructuring or reducing your debts.

2. Automatic Stay: Similar to Chapter 7 bankruptcy, filing for Chapter 13 triggers an automatic stay that stops creditor actions against you. This gives you time to catch up on missed payments and reorganize your finances.

3. Debt Discharge: At the end of the repayment period, any remaining unsecured debts may be discharged, providing you with a fresh start. Chapter 13 bankruptcy allows you to keep your assets while working towards a more manageable financial future.

Deciding between Chapter 7 and Chapter 13 bankruptcy can be a complex decision that requires careful consideration of your financial situation and goals. An experienced bankruptcy attorney can help you understand the benefits and drawbacks of each option and guide you towards the best choice for your circumstances.

If you are considering bankruptcy as a solution to your financial challenges, don’t navigate this complex process alone. Schedule a FREE CONSULTATION with the Botelho Law Group to discuss your options and take the first step towards a brighter financial future. Our experienced attorneys are here to provide you with the guidance and support you need to make informed decisions and move towards a fresh start.

CLICK HERE to schedule your FREE CONSULTATION with the Botelho Law Group today!