What’s The Difference Between A Chapter 7, 11 and 13 Bankruptcy?

Many people might not know that they have options when it comes to filing for bankruptcy

A chapter 7 bankruptcy is the most common, but it might not be the right option for you. This is why it’s important to meet with a bankruptcy attorney. They will be able to assess your case and advise you on the best course of action, be it a chapter 7, 11 or 13 bankruptcy.

So, what are the differences between these bankruptcies?

Chapter 7:

  1. It is usually over within 6 to 8 months.
  2. It will discharge most of your debts.
  3. You can keep your home or your car, but you have to pay at the same interest rate and terms as before the bankruptcy.
  4. Income limits exclude people who can afford to repay their debts.
  5. You could lose non-exempt property, but most people never do.

Chapter 13:

  1. You will repay a portion of your debts over the next 3 to 5 years.
  2. You pay what you can afford. If, for example, after living expenses you have $200 left over every month, that is what you pay. Your creditors get cents on the dollar for what is owed, and any remaining unpaid debt is discharged.
  3. Debts owed to a former spouse can be discharged in a chapter 13, but not 7 or 11.
  4. You can modify the terms of secured loans. For example, if you have a car that is worth $10,000, but you owe $20,000 on it and pay 18% interest, you can keep it in a chapter 7 but you would owe the full $20,000 and pay at 18% interest. In a chapter 13, we could modify the loan terms so you only pay $10,000 at 4.5% interest.
  5. If you have a home that is underwater, a 13 can eliminate the second mortgage. For example, if your house is worth $150,000, with a first mortgage of $160,000 and a second mortgage of $50,000, we could discharge the second mortgage entirely, so you would only owe the first mortgage.
  6. If you are behind on house payments, we can cure the arrearages over a span of up to 5 years and prevent foreclosure.
  7. You can keep property that you may otherwise lose by filing a chapter 7.

Chapter 11:

  1. This is usually for businesses, but it can be filed for individuals. However, it is rare.
  2. It is basically a chapter 13 on steroids. There are slight differences, but they are very nuanced and complex. If you think a chapter 11 is right for you, it is best to discuss this matter with a skilled bankruptcy attorney.
  3. It is usually only used for high income debtors, as it costs a minimum of $10,000 in attorney fees to file.
  4. It could be your best choice, if you have substantial income or assets.

If you are facing filing for bankruptcy, we always recommend speaking with a professional. As you can see, there are many options and it is important that you get the best representation available to help you choose what will be right for you.

If you are in Western Michigan and are looking to speak with someone about bankruptcy, give us a call at Mapes Law Offices. We have been servicing the area since 2008 and have helped hundreds of clients out of their debt and onto financial stability. With Mapes Law Offices, you not only get a highly skilled bankruptcy attorney, you also receive help and guidance to step toward a brighter financial future. We take pride in our work of helping good people go through bad times. We understand that life can take a turn and we’re here to help. Give us a call today at (616) 719-3847 or schedule your free consultation now.

5 Questions You Should Ask Your Bankruptcy Attorney

When you’re in the market for a bankruptcy attorney, you might not be quite sure what to look for. After all, this may be the first time you have ever had to face filing for bankruptcy. And with the already overwhelming and sometimes frustrating situation ahead of you, you want to know that you have the best bankruptcy attorney on your side to represent you.

Luckily, there are some straightforward questions that you can ask any bankruptcy attorney to be sure that they are the right lawyer for you. Here are a few important questions to ask to pick the most qualified and informed professional.

5 Questions That You Should Ask Your Bankruptcy Attorney

  1. Do you practice any other areas of law? Bankruptcy is highly specialized and not something an attorney should dabble in. The bankruptcy laws frequently change and you need someone who knows the ins and outs.
  2. How many cases have you filed? You don’t want an attorney to gain experience at your expense. I have filed almost 2,000 bankruptcies and have seen almost every situation imaginable. An experienced attorney will better assert your rights and will not back down in the face of opposition from an unfriendly creditor or trustee.
  3. Do you file cases under chapters 7, 11 and 13? Some attorneys only file chapter 7 cases because it is easier. They don’t want to put the time or effort into becoming proficient at other types. This is like having a dentist who refuses to work on molars. A good attorney should be able to tell you why you may want to file for chapter 11 or 13, even if you qualify for chapter 7.
  4. Are you board certified? Most people can’t tell if one attorney is better than another, and just go on whatever feels best. Luckily, bankruptcy is one of the few areas where lawyers can be certified as specialists. A board certified bankruptcy attorney must meet the following criteria:
    1. Their practice must be at least 60% bankruptcy.
    2. They must have been practicing primarily bankruptcy law for the past 5 years.
    3. They must have 15 other attorneys submit peer reviews.
    4. They must attend a minimum of 20 hours of continuing legal education every year.
    5. They must pass an 8 hour long written examination.

    As you can see, the requirements are very strict. I am one of only 10 board certified bankruptcy attorneys in the western district of Michigan.

  5. How many adversary proceedings have you prosecuted or defended against? Adversary proceedings are like a trial within the bankruptcy case. They generally occur either when something goes wrong or when your rights have been violated. Hopefully you will not be involved in one, but if you are, you don’t want it to be the first time your attorney is handling one.

We recommend taking these questions with you when you meet with your bankruptcy attorney. We also recommend meeting with more than one attorney, so you can truly pick the one that is best for you. It’s important to make sure you are comfortable with who you are working with and are confident that they will work hard on your behalf.

At Mapes Law Offices, we work hard for our clients in the Western Michigan area to ensure that they are getting the best representation possible. Not only do we help you out of a financial crisis, we also work with you to improve your financial decisions, so you can avoid ever having to file bankruptcy again. We understand that bad things happen to good people and we’ve dedicated ourselves to helping those people get out of rough waters. If you are in the Western Michigan area and would like help with your bankruptcy case, give Mapes Law Offices a call at (616) 719-3847 or request your free consultation today. It only takes one small step to get yourself onto a better financial path.