Modesto, California Consumer Bankruptcy Lawyers

The First question to be answered with any potential bankruptcy case is what is the debtor’s income and household size. This is very important because if the debtor makes too much money for their household size, then they won’t qualify for a chapter 7. The main difference is that in a chapter 7 bankruptcy, the debtor doesn’t pay any money back to the creditors. In a chapter 13 bankruptcy however, the debtor must pay a percentage of what they owe to their creditors over a period of 3 or 5 years. It is important to note that in most cases, the debtor(s) doesn’t pay all of the creditors in full over the 3 or 5 year period. The amount that is paid to the creditors depends on the income and expenses of the debtor(s). Call a Modesto attorney at the law office of Ben Roberts to see if you qualify for a chapter 7 bankruptcy. We will run a very thorough means test for all clients to see if a chapter 7 is possible.

Foreclosure and Bankruptcy-Modesto Attorneys

Whether you file a chapter 7 or a chapter 13 bankruptcy, you will halt any foreclosure that is pending. However, in a chapter 7, the lender can and probably will ask the court for “relief from stay.” This is basically a request to foreclose on the property. A bankruptcy judge will almost always grant their request, but remember, this only happens if you are late on your mortgage. If you are current then you will most likely be able to keep your home if you wish. Therefore, if you want to keep your home and file a chapter 7 bankruptcy in Modesto, then you should be current on your mortgage at the time you file.

Chapter 13 Bankruptcy-Lawyers Modesto, CA

If you are behind on your 1st mortgage payments and you absolutely must keep your home, then chapter 13 bankruptcy is the way to go. Unlike a chapter 7, past-due mortgage payments can be put into a repayment plan. However, it’s important to note that you won’t be able to reduce your interest or monthly payments in a chapter 13. That is something you will have to discuss with your lender. The biggest benefit to a chapter 13 bankruptcy is stripping off your second mortgage. If the value of your home is less than what you owe on your first mortgage, then you can get rid of your 2nd mortgage in a chapter 13. For example, let’s say you owe 200k on your first mortgage and your home is worth 199k or less. Your second mortgage in this situation can be stripped off entirely in a chapter 13 bankruptcy. Now, if your home is worth 201k or more, then you would not be able to get rid of that 2nd mortgage.

Which Bankruptcy Chapter is better for your Credit?

A chapter 7 bankruptcy discharge is better for credit purposes because your discharge comes within 4 to 6 months here in Modesto. Remember, in a chapter 13 your bankruptcy petition is pending and won’t discharge until the end of 3 or 5 years. That means you won’t start rebuilding your credit for 3 or 5 years, whereas in a chapter 7 bankruptcy you start rebuilding within months. Therefore, a chapter 7 is better for your credit.

Questions? Contact Modesto Bankruptcy Attorneys at The Law Office of Ben Roberts Today

If you are thinking of filing for bankruptcy in Modesto, contact bankruptcy attorneys at the Law Office of Ben Roberts today.