No one wants to file for bankruptcy and in many cases it is not even necessary. A brief consultation with a local Tucson bankruptcy attorney will set you on a path to recovery. Sometimes filing for bankruptcy is unavoidable. This is not the time to put off the inevitable due to undeserved feelings of guilt or failure. Instead, it is the time for healing and recovery. Your Tucson bankruptcy lawyer can help stop the harassing phone calls, stop a foreclosure, and stop garnishment of your hard earned dollars.

Chapter 7 Filing

Chapter 7 type bankruptcy has many names. It is sometimes referred to as “straight bankruptcy.” This is the type most people think of when they think of bankruptcy. It is the most common type of bankruptcy.

It is designed to help people get a fresh start, to start over, to give individual consumers and families a chance for a new beginning financially. The beautiful thing about chapter 7 is that it wipes out your “unsecured” debts, that is, it wipes out your obligation to pay certain types of debts, like credit cards and medical bills. Filing a Chapter 7 immediately stops all collection activities against you. It stops all creditors from bothering you, or suing you.

Certain types of debts are not wiped out however. Student loans, some taxes, parking tickets, will survive a Chapter 7 bankruptcy.

Another name for Chapter 7 is Liquidation. That is because when you file Chapter 7, the Court-appointed Trustee temporarily owns all of your property. And, if you own too much property, the Trustee can liquidate or sell the property to raise money for your creditors. However, if you are properly represented by an experienced attorney, you can in most cases keep all of your property. This does vary with the facts of each case, but an experienced bankruptcy lawyer can protect your property using one of the chapters of the bankruptcy laws.

Chapter 13 Filing

Chapter 13 bankruptcy is a court-supervised repayment plan, a consolidation of your debts into one payment, paid to the Court appointed Trustee. The Court has the power to force your creditors into one affordable payment. You pay the Trustee, and then each month, the Trustee distributes the money to your creditors according to the Chapter 13 Plan approved by the Court and created by your Attorney.

Chapter 13 is designed to help people save their home and car, and to stop foreclosures or repossessions. It is designed to pay back your creditors over time, to pay off the debts you cannot wipe out in a chapter 7 like student loans, taxes, past due mortgage payments, or parking tickets. We can also use chapter 13 to protect a cosigner from creditor harassment.

We can consolidate all of your debts (including credit card balances) and often you will not have to pay interest, or even pay back the debts in full. This can save you much money.

It is important that you discuss all of your options and your entire financial circumstances with a knowledgeable attorney before you make your final decision as to which path you should take. Often refinancing your home can be an option to avoid bankruptcy, but you must be careful of people trying to take advantage of you. Sometimes refinancing is not possible, or even a good idea. The danger of refinancing is that you pay off your credit cards with a new loan, secured by your home, but you once again run up those credit cards, so you then owe the higher mortgage and all the credit cards. Be careful. Especially beware of interest only loans, adjustable rate mortgages and balloon payments. If it sounds too good to be true, it probably is!