Personal Bankruptcy

Most American families are one accident, injury, or missed paycheck away from financial disaster. Our volatile economy, high credit card interest rates, and poor job market has left many families teetering on the brink of losing their homes, cars, healthcare, and even self-respect. At Zewdu Alem & Associates, we understand fear and struggles families experience when they are buried under debt, and we can help. 

Bankruptcy isn’t a stigma to be avoided, but a smart debt relief option created by the federal government to help families just like yours. Simply by starting the bankruptcy process, you receive immediate relief from creditors and stop all garnishments and judgements. There are two types of bankruptcy options:

Chapter 7 bankruptcy is a liquidation process that requires you to a “means test” to qualify. After a hearing with the debtors and their creditors, a trustee is appointed. This trustee sells all non-exempt property and pays the creditors. Once this is complete, all qualifying remaining debt is discharged, meaning it simply disappears. Dischargeable debts usually includes credit cards, old rent bills, personal loans, old cell phone bills, pay day loans, vehicle repossessions, debts from a foreclosure, medical bills, some taxes, as well as numerous other types of debt. Non-Dischargeable debts are most taxes, cash advances taken just before filing bankruptcy, payments ordered in a divorce or other family law order, and debts incurred through DUI accidents, or fraud. If you qualify for a Chapter 7 bankruptcy, the entire process takes approximately 3 months.

Chapter 13 bankruptcies are best for people who don’t qualify for a Chapter 7 process or those who wish to retain non-exempt property, such as a home or vehicle. At its core, Chapter 13 is a court-approved repayment plan with a trustee appointed to assure that the plan is followed. A lawyer represents the debtor in court and negotiates with the creditors. Through this process, mortgages and other loans can be renegotiated or modified to lower interest rates and monthly payments. Some debt may be completely discharged while others may be paid pro-rata shares of the debtor’s disposable income.

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