Steve and his wife, Peggy, have been struggling to keep up with their $40,000 in unsecured debt. They have wiped out their savings, but they have been able to keep current on their house and car payments. Every day the couple deals with calls from collectors, but they are hesitant to file bankruptcy, because they fear they will lose their cars and their home. Without vehicles, they question how they would get to their jobs.
“It’s not so much a question of losing assets such as houses and cars, as it is how much equity you have in them,” said Christopher J. Grover, an attorney with Jeffrey Freedman Attorneys, PLLC, who handles bankruptcy cases for the firm. “If you don’t have a lot of equity in them, you may be able to file a Chapter 7 bankruptcy, discharge the unsecured debts, and continue to make payments on your house and your cars.”
If Steve and Peggy do have a lot of equity in their home or cars, then they may want to consider filing Chapter 13, which would allow them to keep their home and cars, but requires them to pay back some of their unsecured debt over a specified time period.
“In either situation, you get relief from a debt load that is overburdening. Calls from collectors stop so the stress level goes down,” Grover said. “It can be a challenge to repay on a Chapter 13 plan — you usually have to keep to a pretty strict budget — but in the long run, you are still better off than struggling to pay back debts you can never catch up on because of interest charges and fees.”
The first step is to make an appointment for a consultation with Jeffrey Freedman Attorneys, PLLC. Our attorneys are extremely knowledgeable about bankruptcy laws and exemptions.