Chapter 7 Vs Chapter 13 Bankruptcy
When you’re in need of filing bankruptcy there are some differences between Chapter 7 and Chapter 13 that you should learn about prior to filing. The most obvious difference between a Chapter 7 and Chapter 13 is that Chapter 7 does not require the setting up of a repayment plan, as a Chapter 13 bankruptcy does.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy or straight bankruptcy is also known as a liquidation, which technically means converting assets into money. However, when the exemptions are properly used, it’s a rarity that Chapter 7 filers lose any property. Chapter 7 is probably the most common form of bankruptcy filing. To qualify for Chapter 7, the debtor is required to pass a means test which takes the last six months average income of the debtor and compares it against the debtor’s expenses. The amount of income a debtor can make to file a Chapter 7 bankruptcy varies from state to state. The main benefit of a Chapter 7 bankruptcy is to give debtors with large amounts of unsecured debt, like credit cards, a chance to wipe out the debt and get a fresh start. The whole process usually takes 3 to 6 months for this type of bankruptcy filing. At the end of the proceeding many Chapter 7 bankruptcy filers may end up being debt-free.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is not the first choice of most debtors. The reason many people shy away from filing Chapter 13 is because of the 3 to 5 year repayment plan. A Chapter 13 bankruptcy still has many benefits, especially for those that don’t want to lose any real estate. Where a Chapter 13 shines is the ability to negotiate a plan of reorganization and be able to catch up on back mortgage payments. In a Chapter 13 bankruptcy the secured debts get priority and are paid first and the crumbs will be given to the unsecured debts. Chapter 13, like all bankruptcy filings, has the power of the automatic stay to stop collection activity by the creditors. When filing Chapter 13 bankruptcy it’s best to be represented by a bankruptcy attorney that’s familiar with this chapter of bankruptcy law as they will have the responsibility to negotiate with the trustee and the creditors.
Are you a person who is having sleepless nights due to overwhelming debts? Then bankruptcy is for individuals like you. If you want to stop the harassing calls from your creditors and get back to leading a normal life bankruptcy can give you the relief to make it possible. Call or fill out the form now to get a FREE NO OBLIGATION CONSULTATION with a bankruptcy attorney in your area. It will only take a few minutes to change your life.