Be sure to file for the type of bankruptcy that’s right for you

One kind of bankruptcy filing may be best in your situation.

Just because you’re in financial straits and thinking about bankruptcy doesn’t mean you have to give up everything that’s important to you. But it’s important to know your options and what bankruptcy means for possessions like your car or your house.

Consider the story of a husband and wife and their family of 16 who worked with an attorney to file for Chapter 7 bankruptcy protection, which involves a sale of assets to pay off certain kinds of debt. Although houses often are exempt from liquidation, in this case the house was on a farm where the family had lived for years and built up significant equity, and the bankruptcy trustee wanted to cash out that equity by selling the property.

Under a Chapter 7 bankruptcy, this large family was on the brink of losing their longtime home until they got a second opinion from another attorney. Converting the Chapter 7 filing to a Chapter 13 filing stopped the house from getting sold.

“A lot of times people go to attorneys that only do Chapter 7 filings so they’re not getting both sides of the story. They don’t know what their Chapter 13 option is, which could be a better, safer option,” said Melvin J. Babi, an attorney with Babi Legal Group, PLLC in Farmington Hills.

“Most people when they come and do bankruptcies they expect to walk away from everything in a Chapter 7. That’s just not always the case.”

Because bankruptcy is not one size fits all, there are different kinds of bankruptcy filings. Here are some details on the most common kinds of protection:

*Chapter 7 bankruptcy sells property to pay off creditors and erases debts like credit card and medical bills. You can keep things like clothes and household furnishings that are exempt from liquidation, and in most cases you can keep assets including your house and your car if you’re able to keep making loan payments. The process is shorter than other forms of bankruptcy and typically lasts about four months, but not everyone can file under Chapter 7. If your income is too high, for example, you won’t qualify for Chapter 7 bankruptcy.

*Chapter 13, also known as “wage earner” bankruptcy, reorganizes debt and eliminates debt over a period of three to five years. Debts are refigured and minimized based on how much money you earn and how much you owe, and you can make up missed payments on a car or house to prevent repossession or foreclosure. If you don’t qualify for Chapter 7 bankruptcy, you’ll qualify for Chapter 13. But even if you do qualify for Chapter 7, you may be better off in a Chapter 13. For example, it may be possible to restructure a car loan and reduce the balance so that payments are lower.

In serving more than 2,500 satisfied clients over the years, Babi Legal Group has the experience to counsel clients on the type of bankruptcy filing that’s best for them. Unlike large law firms where clients can get shuffled between attorneys and meet with somebody different on every visit, at Babi Legal Group the same lawyer guides clients through the process with personal service from beginning to end.

For more information about Babi Legal Group and how to make the bankruptcy decision that’s in your own best interest, call 248-434-4110 or click here to set up a free consultation.