Last week the U.S. House of Representatives overwhelmingly passed a Credit Cardholders’ Bill of Rights, intended to protect consumers from sharp interest rate increases, harsh penalties, short payment windows and other abusive practices. A similar measure is moving through the Senate. President Obama is pushing the legislation. Therefore, if you are a resident of Easton, Bethlehem, or Allentown Pennsylvania, help may be on the way.
Meanwhile, with most U.S. households struggling as a result of the current economic conditions, it is only natural that the plastic cards are being used more frequently. This unavoidable rush of credit card debt for some individuals may only be a temporary stopgap on the way to filing for bankruptcy. Thus, we can look at the most basic question individual debtors have when filing for bankruptcy, which chapter is right for me? (Most individual debtors will qualify for bankruptcy under chapter 7 or chapter 13 of the Federal Bankruptcy Code).
A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
Conversely, chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time.
[THE FOREGOING IS INTENDED TO BE A GENERAL DISCUSSION OF THE LAW. IF YOU HAVE A SPECIFIC LEGAL QUESTION, PLEASE CONTACT OUR OFFICE AND SPEAK WITH AN ATTORNEY].& ;