About Bankruptcy
What is bankruptcy?
Bankruptcy is a legal tool that enables people in financial crisis to either eliminate their debt (Chapter 7), or to pay their debts over time (Chapter 13). Although there are other types of bankruptcy, such as those available to businesses, Mr. Ramos is currently only representing clients that qualify for Chapter 7 bankruptcy. Under amendments to the Bankruptcy Code in 2005 there is a two-part test that is used to determine if you qualify for Chapter 7. At no cost to you I will help you determine if you qualify for a Chapter 7 or a Chapter 13 bankruptcy. The main differences are explained below:
A Chapter 7 is called a straight bankruptcy or a liquidation bankruptcy. In a Chapter 7, all unsecured debts (such as credit card debts, medical bills) are discharged or dismissed. Secured debts (debts for which you pledged a piece of property in exchange, such as your home or car) can be handled in a variety of ways. In exchange for this discharge, your assets temporarily become the property of the court and are subject to the court's scrutiny. If the court finds assets that can be sold to pay your debts, it will do so. It is reassuring to know, however, that ninety-five percent of the time, the court finds that debtors have no assets worthy of liquidation. Some debts are not dischargeable in a Chapter 7 bankruptcy, such as student loans, recent or unfiled taxes, alimony and child support.
A Chapter 13 is called a reorganization bankruptcy. In a Chapter 13, you pay your debts over a three to five year period. During this time, you will pay your expendable income to the court, who will take that money and pay your creditors for you. Chapter 13's are useful for debtors who have a great deal of nondischargeable debts (e.g. student loans, taxes, alimony, child support) or who have valuable assets (e.g. a home) that would be lost if they filed a Chapter 7.
Will I lose my property if I file bankruptcy?
If you file a Chapter 13 bankruptcy, you can keep all of your assets. Most people who file Chapter 7's can also keep their assets. This is because the law allows Chapter 7 debtors to claim certain "exemptions" - assets that they get to keep regardless of their bankruptcy filing. Personal property and household goods like computers, wedding rings, furniture, appliances, clothing, musical instruments and animals are typically exempt. Whether or not you can keep your vehicle or house depends upon the equity in those items. You have equity in a home or vehicle if you have paid for the home or vehicle in full, or if it is worth more than you owe on it. The law exempts between $50,000 and $150,000 of equity in a home, depending on the debtor's circumstances.
How much does it cost to hire an attorney?
Attorneys fees are provided on a sliding scale basis depending on your income level. For clients that have no large assets (e.g. real estate), fees are as low as $999.
You may wonder how you can afford to retain me when you may not even be able to afford the basic necessities of life. Typically, people stop paying their unsecured debts (e.g. credit cards, medical bills) once they have decided to file for bankruptcy. The freed up funds may be used to hire me to represent you. I also offer a payment plan where you can pay my fees over time.