In Maine, you can file personal bankruptcy when you can no longer pay your bills and debts. The federal bankruptcy courts have two options for you to resolve your debts: Chapter 7 and Chapter 13. Each bankruptcy chapter gives you a different way to eliminate your debts. Both have a powerful tool to keep your creditors at bay: automatic stay.
Automatic Stay Prevents Creditors Works Differently Depending on the Bankruptcy Chapter.
An automatic stay prevents creditors from starting or continuing any debt collection activities. This means they must automatically stop what they are doing to get you to pay them. For instance, creditors can no longer file or continue a lawsuit against you. They cannot continue to collect a garnishment against you. If you file chapter 13 and trying to save your home, the lender cannot start or continue foreclosure proceedings. As long as your home hasn’t been sold, it must be removed from the auction block. The Chapter 7 cannot stop a foreclosure.
The automatic stay can help you immediately with basic needs too. For instance, it can also restore utilities. This means if your utilities were shut off because no non-payment, you have them restored.
Chapter 7 Eliminates Debts without Repayment.
Chapter 7 is called liquidation bankruptcy. It allows a bankruptcy trustee to take property from you, sell it and give the money to your creditors. Often, this does not happen because a person does not have enough property to sell. In this situation, the debts are eliminated. It is like they never happened.
Chapter 7 is only for unsecured credit. Unsecured credit is any type of credit that is given to you based on a promise to repay. Unsecured credit includes credit cards, store
Chapter 13 is Another Bankruptcy Option in Maine.
Bankruptcy filing Portland ME also includes Chapter 13. This is also called a wage earner’s bankruptcy because it is for people with enough money to repay their creditors. Many people in Maine wanting to save their homes from foreclosure choose this bankruptcy option.
It requires you to repay creditors over a three-to-five-year-period. The monthly payments are sent to the bankruptcy trustee. The trustee is responsible for dividing those payments and sending them to your creditors. You must keep all payments to creditors current. For instance, you must make all mortgage payments to avoid your Chapter 13 case from being dismissed.
Unlike Chapter 7, a Chapter 13 bankruptcy chapter includes unsecured and secured types of credit. It is why people file chapter 13 when they can no longer afford their homes, cars or anything backed by collateral.
Bankruptcy Courts do not Allow You to Pick Your Bankruptcy Chapter.
Prior to 2005, a person filing personal bankruptcy (debtor) could pick their bankruptcy chapter. For example, a debtor could afford to repay creditors, but they would file Chapter 7 to avoid paying them. The law was changed to force debtors to file the bankruptcy chapter they could afford and not the one they wanted. To determine if you can file Chapter 7 or Chapter 13, it is best to talk to a bankruptcy lawyer.