Part 1: Choosing between Chapter 7 and Chapter 13 bankruptcies

For many people, the past 10 to 20 years may have been financially challenging. Many people were impacted by the recession. For example, many experienced job loss, flat wages, loss of home, increased health insurance premiums or high deductibles, mounting medical bills, unsustainable student loan payments, high credit-card debt and more.

Any New Mexican struggling to keep his or her head above water should speak with a lawyer to understand whether bankruptcy could be a smart option. There are many things to consider, including the kind and level of debt, assets the person hopes to keep, whether home foreclosure or vehicle repossession is looming, the impact on credit, whether the person is working and the income level, whether the person owns a business and more.

If the decision is made to go forward with bankruptcy, the individual must in most cases choose between Chapter 7 and Chapter 13 (these are chapters of the U.S. Bankruptcy Code).

Chapter 7 is called a liquidation or straight bankruptcy because the person is allowed to keep certain assets that are exempt from liquidation, with the remaining property sold off or liquidated to pay down the person's debts. Debts remaining after this process are normally discharged or extinguished, meaning they do not exist anymore. Certain kinds of debts may not be discharged like child support or alimony, student loans unless there is extreme hardship, most taxes and more.

Chapter 7 is by far the most common kind of bankruptcy for most individuals, but it may not be used if income exceeds a certain level.

We will continue our discussion of the choice between the two kinds of bankruptcy in a future blog.

In Albuquerque and throughout New Mexico, the law firm of Giddens & Gatton Law,amp; Jacobus has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.

We represent many debtors and creditors in Albuquerque, Santa Fe, Las Cruces, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C., at (505) 273-3720 to set up an appointment or visit the firm's website at giddenslaw.com. Giddens & Gatton Law,amp; P.C., is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.

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