If you're considering filing for bankruptcy in Modesto, you're not alone. According to the Federal Government's U.S. court statistics, more than 126,000 California residents filed for consumer bankruptcy in 2008. Over 60,000 of those cases were filed in Central California alone, suggesting that the Modesto area has been the hardest hit in this period of economic downturn.
The choice to file for bankruptcy is not one that should be taken lightly. Since filing for bankruptcy can stay on your credit report for up to 10 years, it can be tough to buy a home or even obtain credit after you file. There are certain chapters of the U.S. Bankruptcy Code that are designed to get you out of debt, with Chapter 7 and 13 being the most widely used in consumer cases. You must weigh your options carefully before proceeding, and bankruptcy lawyers in Modesto can help you decide which solution is right for your individual situation.
Chapter 7
Also known as "straight" bankruptcy, Chapter 7 effectively eliminates debt, along with associated collections, lawsuits, repossessions and foreclosures due at the time of filing. Although the courts may still allow eviction, repossession and foreclosure, Chapter 7 can help you start anew by wiping out most debts. A bank-appointed trustee will sell property and other assets (when applicable) to pay creditors, and then debts are discharged.
Chapter 13
According to the U.S. Bankruptcy Court in the Eastern District of California, Chapter 13 applies only to individuals whose debts do not exceed $1,347,550 ($336,900 in unsecured debts and $1,010,650 in secured debts). Chapter 13 is also known as "reorganization" bankruptcy. A bankruptcy lawyer can negotiate for a reduced settlement of your debt based on financial need. After you file, you will have a period of three to five years to pay off the negotiated amounts.
Although consumers can represent themselves in bankruptcy cases, it is not typically wise to do so. An experienced lawyer in Modesto can better serve your needs and follow all recent changes to bankruptcy law to help you achieve the best outcome in your case.
