Terry White CPA

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What is Bankruptcy?

Bankruptcy is the control and distribution of the assets of a debtor by the court.

There are two kinds of bankruptcy that are of concern to the average person.

These are Chapter 7 and Chapter 13 of the bankruptcy code.

Chapter 7 is a liquidation of the taxpayer's assets by the court. The court then distributes the proceeds to the creditors.

Chapter 13 is the management of the debtor's affairs by the court. The taxpayers creates a plan under which his creditors are to be paid off. The court prevents creditors from suing to collect the debts while the plan is in effect.

Chapter 13 is only available if the debtor has a steady stream of income.  This form of bankruptcy causes the least damage to the debtors credit standing. It is normally possible for the debtor to keep his home under a Chapter 13 bankruptcy.

Chapter 7 is sometimes a good way of helping a debtor to keep his home. Credit card debt and second and third moorages are often discharged by the bankruptcy. This leaves the debtor with more money to pay his mortgage. Often a debtor who is about to lose his home can make the monthly payments on his first mortgage once his credit card debt and the second mortgage have

been discharged.

What Can I do for You?

When I consult with you, I can tell you if your financial position suggests that bankruptcy may be a good course of action. I will then recommend that you consult a bankruptcy attorney.

Bankruptcy