Filing for bankruptcy is another means of obtaining relief from debt. In a nutshell, this can be accomplished either through a complete discharge of the debt (wiping the slate clean and starting over), or through a restructuring of the debt (paying back a portion of the debt over a period of years). A Chapter 7 bankruptcy is a basic liquidation for individuals and businesses whereby a debtor asks the court to erase all their debts completely.
In a Chapter 7 bankruptcy a debtor must surrender all of his or her non-exempt property to a bankruptcy trustee who then sells the property in order to pay back their unsecured creditors, whereas the rights of secured creditors to their collateral generally continues. In exchange, the debtor is entitled to a discharge of some of the debt. The debtor will not always be able to obtain a discharge, and certain debts, such as spousal and child support, student loans, certain taxes, cannot be discharged. While a Chapter 7 bankruptcy is generally the simplest and easiest bankruptcy to file, in 2005 there were major changes to the bankruptcy laws which made it more difficult for people to qualify for a Chapter 7 bankruptcy. The 2005 amendments to the Bankruptcy Code introduced the “means test” for Chapter 7 eligibility. For individuals that fail the means test, the alternative is usually a Chapter 13 bankruptcy. A Chapter 13 bankruptcy is a restructuring of your debt (as opposed to a complete discharge) with a re-payment plan for individuals with a regular source of income. Creditors generally have no say in the formulation of the plan. When the debtor completes payments pursuant to the terms of the plan, the court will formally grant the debtor a discharge of the debts provided for in the plan. However, if the debtor fails to make the agreed upon payments or fails to seek or gain court approval of a modified plan, a bankruptcy court will often dismiss the case on the motion of the trustee.

After a dismissal of the case, creditors can again resume attempts to collect on the debts. Statistics show that a large percentage of people end up falling out of the Chapter 13 plans simply because they cannot afford to make the required payments. If your finances have brought you to the point where you are considering filing bankruptcy, please call us for a free consultation and we can explore all options with you.


The Gershfeld Law Group provides a variety of legal services, ranging from Debt Relief to Civil Litigation and Business Transactions. We pride ourselves in providing excellent legal service with a personal touch. At the Gershfeld Law Group, you are not just a name. We take pride in having a personal relationship with each one of our clients.


Here at the Gershfeld Law Group, we understand that “Strategy” makes the difference between success and failure. Every move we make on behalf of our clients is carefully planned and methodically executed. With proper leverage and excellent negotiation skills, we always put our clients in a position of strength so they can effectively achieve their goals.


Let this year be the year you make a commitment to becoming debt free. Call us for a personal and free consultation where we can review your financial situation and walk you through a number of possible options!!!