Washington D.C. Debt Relief Attorney

Most consumers will file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. Their eligibility for each will be determined by their current level of income. Chapter 7 bankruptcy is meant to assist consumers with little to no income, while Chapter 13 bankruptcy helps consumers that have sufficient income to partially repay their debts.

In a Chapter 7 bankruptcy, your nonexempt assets will be liquidated, and the proceeds will be used to compensate your creditors. Liquidation can sound intimidating, but you can exempt and protect many of your assets, including equity in your home and vehicle. In many cases, you can keep most or even all of your assets.

Chapter 13 bankruptcy filers must make monthly payments as part of a repayment plan. This plan reorganizes and consolidates all outstanding debts, and the monthly installment amount will be determined by your current disposable income – not the total amount of your debt. Most plans last between three and five years. 

Upon completing the liquidation process or your repayment plan, most bankruptcy filers will be able to discharge their unsecured debts. This means any remaining credit card debt, medical debt, personal loans, or unpaid utility bills will be forgiven. 

Student loan debt is tougher to eliminate but can sometimes be discharged at this stage if you can prove “undue hardship.” Though you cannot typically discharge other types of debt through bankruptcy, you may be able to reduce or pay off many types of priority debt – including tax debts – as part of your Chapter 13 bankruptcy plan. 

Regardless of which type of bankruptcy you file for, eliminating unsecured debts can give you more financial flexibility and resources to address the debts you cannot discharge. For example, say you have a considerable amount of tax debt, credit card debt, and missed mortgage payments. 

Because you still have reliable income, you choose to file for Chapter 13 bankruptcy. The automatic stay prevents a foreclosure from proceeding, and you agree to address the missed mortgage payments and related penalties as part of your repayment plan. Because it is a priority debt, you must also pay off your tax debt in full as part of the reorganization. 

The amount of your monthly payment is determined by your disposable income, and your payments over the next five years primarily go toward curing your tax debt and mortgage payments. At the conclusion of the bankruptcy, your tax debt and mortgage arrears have been paid, but you still need to continue making hefty mortgage payments going forward – and you have barely touched the entirety of your growing credit card debt. Thanks to bankruptcy, you are able to discharge the entirety of the credit card debt, and you can therefore exclusively your disposable income to keep up with your mortgage. 

This is just one scenario where bankruptcy can provide you with powerful relief. At The Belmont Firm, we are committed to helping Washingtonians secure debt-free futures. Our Washington D.C. debt relief lawyer can carefully assess your unique circumstances and advise how bankruptcy can help you overcome your financial difficulties. 

Same-day appointments and payment plans are available. Call (202) 875-8445 or contact us online today!