Chapter seven – There’s really is not much limitation on who can file a chapter seven bankruptcy. The point of the chapter seven is to wipe out unsecured debt, and it’s really up to you to decide how much is enough. You know, if you come in and say, I have one credit card for $500, I’m going to tell you not to file. But, if you have a dozen payday lenders and they’re all charging 400% interest, and they’re all calling you and won’t tell you who they are until you make a payment and there’s no possible way you’re going to track down the right people pay the right amount. Then a bankruptcy would be useful regardless of how much money you owe, because you get a federal court order telling all of them to go away. So you have this backstop that lets you move on with life and stops them from following you.
That’s worth it. Now, some people come in with $4,000 worth of payday loans and it’s worth it. Some people come in with $400,000 medical it’s worth it, but it just depends on your situation. And it’s not tied to a specific dollar amount. It’s tied to why we care. We don’t care that some guy with a green visor and a tight Tycon road, Ticonderoga, number two pencil is writing your name and a ledger somewhere who cares. We care what they’re doing about it. We care that they’re collecting. We care that they’re calling. We care that they’re suing. That’s what bankruptcy stops. It stops. Collections stops them from bothering you from stops you from the stops, the things that keeps you from living your life. Now, chapter 13 is different. Chapter 13 is to help you with stuff you want to keep, not just getting rid of stuff we want to get rid of, but keeping this stuff we want to keep.
And that means that we are going to set up a payment plan to pay for the house that you need for your family, the car you need to get to work. You know those types of debts, and again, we don’t care how much debt we’re getting rid of, because that’s not the point. The point of the chapter 13 isn’t always to get rid of unsecured debt. You may be getting rid of that 400,000 in medical, but at the time you were in the hospital may have also left you behind on the house. And that’s what we care about. We don’t care about the ledger somewhere that says you owe money. We care about how it affects your life. In this case, and losing the house. Now there are debt limits for a chapter 13. If you owe too much money, then they don’t want you with a chapter 13.
They assume that if you owe $3 million in unsecured debt, you’re not a person found a bankruptcy. You’re a business. Even if you’re doing business in your name, you’re a business. And so you should be in a chapter, chapter 11 for businesses, just like all those big Wall Street guys. Well, the secret to that is what I kind of joke in. They call it chapter 20. That’s where we go and we file a chapter seven. We wipe out all that unsecured debt. Now that the unsecured debt is gone, you have any debt limit issues. So then we file a chapter 13 to get you caught up on your house. The courts protecting you from foreclosure while you’re in the chapter seven and the courts letting you reorganize the payments on your house and your chapter 13, seven plus 13, that’s your chapter 20, that gets you around those limitations and allows you to get that result that you need. And again, it’s another good reason to have a creative attorney.