Is Bankruptcy Right For You?
Bankruptcy is a legal process in which a federal court gives a fresh start to a person (or business) by reorganizing or forgiving some or all of the person’s debt. Filing for bankruptcy is a significant and important life decision that someone struggling with overbearing debt should consider in order to regain control of debt and achieve the type of life that all people deserve.
Debt can be overwhelming, and it can stem from any one or more major life events.
Rising up from underneath an overwhelming amount of stress related to financial obligations may be a crucial step in overcoming many other problems in your life. Filing for bankruptcy is something that people from all walks of life have used to regain control of their financial lives. Both New Mexico law and United States federal law protects consumers who are struggling with debt.
Types of Bankruptcy Filings
There are two common types of bankruptcy filings for consumers – Chapter 13 bankruptcy and Chapter 7 bankruptcy.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is called a liquidation bankruptcy because the court, through a bankruptcy trustee, may sell and liquidate some of your property to pay back portions of your debt. There are certain types of property (called exempt property) that are protected from liquidation.
Chapter 13 bankruptcy
A Chapter 13 bankruptcy filing is the typical re-organization filing for consumers. In Chapter 13 bankruptcy, you are able to keep your property, but you must make monthly payments for three to five years to repay some of your debt.
What You Need to Consider
If you are faced with debt problems, it’s important to discuss them with one of our experienced bankruptcy attorneys to determine the best way to deal with your unique situation. One of the important decisions that our New Mexico bankruptcy attorneys will help you make at the outset is what kind of bankruptcy to file. You will need to organize your paperwork regarding your debt, income and assets in order to give your attorneys and, eventually, the court an insight into your situation and the best ways to help you.
Some of the other issues that our bankruptcy attorneys will be able to help you with are considerations related to whether you should file for bankruptcy or seek some other resolution to your situation, managing lawsuits related to your outstanding debts, limiting collection calls, stopping wage garnishments and other attempts to collect debt and foreclosures. A New Mexico Chapter 7 bankruptcy differs substantially from a New Mexico Chapter 13 bankruptcy, and our lawyers can assist you not only in dealing with your debt, but also in understanding the different types of bankruptcy filings and how each will impact you differently.
For more information regarding the specific types of bankruptcy filings, please visit our Chapter 7 bankruptcy page and Chapter 13 bankruptcy page.
When you legally cancel debt, you are discharging it, which is the main reason someone files for bankruptcy. In a normal bankruptcy situation, a majority of consumer debt can be discharged. This includes:
- Medical debts
- Credit card debts
- Some lawsuits
Our attorneys can help you determine if your debt can be discharged, or canceled, through the bankruptcy process. If you file for Chapter 7 bankruptcy, most debts will be terminated upon completion of the filing.
Chapter 7 filing is for individuals with unsecured consumer debt, like credit cards. Generally, when you file for Chapter 7 bankruptcy, you, as the debtor, may be allowed to keep significant assets including your vehicle, household contents and home.
After bankruptcy is filed, it is common to continue making payments on your home or vehicle in order to keep them. If you file for Chapter 7 bankruptcy, you will need to sign and file an agreement to repay these debts before the case is closed. This is called a reaffirmation.
If no agreement is filed requiring you to continue payments, the debt is canceled. The creditor could decide to not accept payments and may decide to repossess or foreclose on property. An attorney at Regazzi Law, LLC, can work with you and the creditor to discuss and sign the reaffirmation agreement.
If you are thinking of filing bankruptcy, you may worry that it means losing your home or vehicle. Chapter 13 bankruptcy utilizes a payment plan to pay off debts over several years. You will not lose your home with this filing if you immediately start making your regular payments and, if necessary, the catch-up payments outlined in your repayment plan. If you are up-to-date on your home mortgage, this payment is paid by you while other debts are encompassed in the Chapter 13 payment plan. If you are behind in mortgage payments, your house is brought into the payment plan and extra payments are made to make up the amount you are behind on.
Most people do not lose their homes if they can afford to make the mortgage payments when filing for Chapter 7 bankruptcy. Depending on the amount of equity you have and the value of your home, you have a strong possibility of keeping your home.
If you have decided to file for bankruptcy, or at least want to learn more, consult with an experienced bankruptcy attorney. Filing for bankruptcy is complicated, and it must be done right, otherwise, you risk the bankruptcy court denying the discharge of your debt. Your attorney will help you gather the information necessary to get a clearer picture of your debt, your income and your budget to determine whether filing bankruptcy is truly the best option for the debt relief you seek.
At Regazzi Law, LLC, we are here to help you make informed decisions that work for you. We can help manage lawsuits related to your debt, stop wage garnishments, limit collection calls and other attempts to recoup debt or foreclosures. We can help you understand the differences between the various bankruptcy chapters and the resulting impact on your financial future. Email us or call 505-265-1000 to set up an appointment to learn more.