What Happens to Your Debt when You Declare Bankruptcy

The goal of the personal bankruptcy system is to help people who are in over their heads with debt get financial relief and a road back to financial stability. Whether you file for Chapter 7 or Chapter 13 bankruptcy, bankruptcy can help make your debt more manageable.

Contact us for a free consultation. Bankruptcy lawyer Tim Springer helps people throughout Central California get debt relief. At our law firm, our goal is to help you get your head above water when you are drowning in debt.

Different types of debt are handled differently under bankruptcy law, and there are differences between Chapter 7 and Chapter 13. Here are a few general observations about the impact of declaring personal bankruptcy:

Credit Card Debt

Chapter 7 bankruptcy can reduce or even eliminate your credit card debt, fines, and late fees. Many people think Chapter 7 is not available anymore because of the changes to the bankruptcy law, but that simply is not true. Many people will still qualify to file Chapter 7 bankruptcy.

Chapter 13 bankruptcy allows you to reorganize your debt so you can pay it off over a longer period of time. It reduces or eliminates fines and late fees. Chapter 13 consumer bankruptcy makes your credit card debt more manageable as you work to pay it off.

Medical Debt

It is a sad fact that many people find themselves seriously in debt because of serious medical problems and mounting medical bills. Just like credit card debt, Chapter 7 can reduce and even eliminate medical debt that is too great for you to pay. Chapter 13 bankruptcy allows you, if you have the ability, to pay your medical bills over a longer period of time.

Home Mortgages

With the recent developments in home mortgage lending, many people who have adjustable rate mortgages (ARMs) and other so-called "sub-prime" home loans are finding themselves in trouble. A very large number of sub-prime mortgage borrowers have been unable to pay their ARM home mortgages once the initial "teaser" interest rate expires, rates go rapidly up, or balloon payments are due.

Bankruptcy attorney Tim Springer understands the problem, and he is here to help you explore your options to deal with a home mortgage you can't pay.

Neither Chapter 7 nor Chapter 13 personal bankruptcy will get rid of your mortgage payments and let you keep your house. By temporarily allowing you to stop the threat of foreclosure, it can give you time to get caught up on your mortgage payments. You may be allowed to sell your home yourself, which could be an advantage.

Car Payments

Many people fear losing their car—their only means of transportation to get to work. If you are being threatened with repossession or recently had your car repossessed, contact our office immediately. We may be able to help you get it back.

If your car was repossessed and auctioned off for less than the amount you owe, the finance company will likely sue you for the additional amount owed. This is called seeking a "deficiency judgment." Bankruptcy can reduce or eliminate that debt.

Personal Loans

As with medical bills and credit card debt, personal bankruptcy can either eliminate or reduce the amount you owe in personal loans. It will depend upon whether you qualify for Chapter 7 or Chapter 13 bankruptcy.

Contact our law office in Fresno, California, for a free consultation to learn more about how bankruptcy can help you resolve your particular financial situation. We look forward to helping you back on the road to financial stability.