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Bankruptcy may provide a path to manage certain debts, protect important assets, and create a plan for financial recovery. When financial challenges become overwhelming, our Danville bankruptcy attorneys at Mette Attorneys at Law can help you understand the legal options available to address debt and move toward a more stable future.
Chapter 7 Bankruptcy
There are several types of bankruptcy available under federal law, but the two most common options for individuals are Chapter 7 and Chapter 13 bankruptcy. The right choice depends on a person’s specific financial circumstances.
Chapter 7 bankruptcy is designed for individuals who have limited income and are unable to repay their debts. It is commonly referred to as “liquidation bankruptcy” because certain non-exempt assets may be sold by a bankruptcy trustee to help pay creditors. However, many individuals who file for Chapter 7 bankruptcy are able to keep most or all of their property because bankruptcy laws provide exemptions that protect certain assets.
The Chapter 7 process typically begins when an individual files a bankruptcy petition with the court. After filing, a bankruptcy trustee is appointed to review the case and determine whether any non-exempt assets are available for liquidation.
Eligible debts may then be discharged, meaning the filer is no longer legally responsible for repaying those obligations. An automatic stay goes into effect after filing, requiring most creditors to stop collection efforts for debts. Chapter 7 bankruptcy may eliminate many types of unsecured debt, including:
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Credit card balances
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Medical bills
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Personal loans
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Certain business debts
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Other financial obligations that are not secured by property
However, some debts typically cannot be discharged through Chapter 7, including child support and alimony obligations, certain tax debts, most student loans, and debts related to fraud.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows individuals with a regular source of income to reorganize their debts and create a structured plan to repay some or all of what they owe over a set period of time. Unlike Chapter 7 bankruptcy, Chapter 13 does not require the sale of assets. Instead, it allows individuals to keep their property while making payments through a court-approved repayment plan.
The Chapter 13 process begins when a debtor proposes a repayment plan that outlines how debts will be handled. Once the plan is approved by the court, the individual makes monthly payments to a bankruptcy trustee, who then distributes those payments to creditors according to the terms of the plan. After successfully completing the repayment period, certain remaining eligible debts may be discharged.
Bankruptcy cases require careful preparation and a thorough understanding of applicable state and federal laws. At Mette Attorneys at Law, our lawyers help individuals review their financial situations and determine the appropriate course of action.
Move Forward with Confidence with Our Danville Bankruptcy Lawyers
Financial struggles do not have to determine your future. Mette Attorneys at Law is committed to helping clients explore solutions and take meaningful steps toward financial relief. If you need assistance from our Danville bankruptcy attorneys, contact us at 717-928-8424 or through our online contact form to learn how we can support you.