People who don’t have any assets, may not worry about bill collectors calling every day. They think that there is nothing that the credit card companies can take from them. They are surprised when creditors start threatening to garnish their wages. Since they barely have enough money for rent and food, this scares them. They finally call a Bankruptcy Lawyer St. Louis MO. Once the lawyer files an application for bankruptcy, the phone calls and garnishment threats stop. The debtor now has time to concentrate on his financial health.
There are two ways for a person to file for bankruptcy. Chapter 7 allows a bankruptcy trustee to sell off the debtor’s assets and distribute the money to creditors. Any debts that aren’t paid from the profits are forgiven. Chapter 13 places the debtor on a repayment plan. The bankruptcy trustee monitors the debtor’s monthly budget and ensures that creditors receive a minimum payment each month. While a Chapter 7 bankruptcy can be over within a few months, a Chapter 13 repayment plan can take up to five years to complete. For that reason, most debtors prefer using Chapter 7.
The US Congress amended the federal bankruptcy law to make it harder to use Chapter 7. Only people who make less than the median income for the state they live in are automatically able to use it. They must show their proof of income for the previous six months. People who make more than the median income may receive a hardship approval. Chapter 13 requires that the person must be able to pay $100 toward their unsecured debt. If they can’t meet this threshold, then their Bankruptcy Lawyer St. Louis MO can petition the court for permission to use Chapter 7.
If the debtor is required to use Chapter 13, the Bankruptcy Lawyer St. Louis MO will scrutinize the monthly budget to make sure that it is reasonable. During the repayment period, the debtor is not allowed to use credit cards to make up any cash shortfalls. If the debtor fails to make any monthly payments, the remainder of the debts will not be forgiven. Van Dillen & Flood P.C. is one of the St. Louis law firms that help debtors declare bankruptcy and ensure their financial rights are protected. Click here for more information.
