The most common types of bankruptcies
filed are Chapter 7 and Chapter 13 bankruptcy. If you are not aware of how
these two work, get reading this article. We are going to highlight certain key
differences between Chapter 7 and Chapter 13 bankruptcies, so you can decide on
the right one to solve your case.
Chapter
7 Bankruptcy
It is also known as liquidation
bankruptcy that discharges most of common unsecured debts such as medical bills
and credit cards without having you to pay off the balances using a repayment
plan. In order to become eligible for Chapter 7 bankruptcy, you have to meet
certain income requirements. In case you are earning more than the standard
earning bar in the America, you’ll be redirected for filing Chapter 13
bankruptcy.
As you file for Chapter 7, “automatic
stay” – an order – is immediately issued, stopping almost all your creditors
from trailing the collection efforts. Moreover, you will be assigned a
bankruptcy trustee, who will administer the very case of yours. In addition to
supporting documents and looking over your bankruptcy papers, the trustee will
sell all your nonexempt assets to pay your creditors. In case there are no
nonexempt properties with you, the creditors get nothing.
Chapter 7 bankruptcy always works well
for the ones with low-income or no assets at all. Moreover, it also works for
those whose eliminated debt surpasses the sold property’s value — particularly
if your bankruptcy trustee puts the funds on non-dischargeable dues, for
example –support arrearages or income tax.
Chapter
13 Bankruptcy
It is known as reorganization
bankruptcy, deliberated for the defaulters with fixed income and ample left
over for each month to pay off, a portion of their debts at best using a feasible
repayment plan. Despite the fact that a majority of Chapter 13 filers earn too
much to become eligible for Chapter 7 bankruptcy, most of them decide on filing
Chapter 13 bankruptcy, for it provides multitude of advantages that are not
available under Chapter 7 bankruptcy.
Under Chapter 13 bankruptcy, you keep
your assets (even including nonexempt properties—but you pay the creditors an
amount equivalent to the cost of your nonexempt assets). In turn, you pay off a
portion or all your unsecured dues using a repayment plan. The amount you have
to pay off typically depends depend upon your type of debts, income, and
expenses.
Generally,
Chapter 13 bankruptcy is meant for the defaulters who are not qualified for Chapter 7,
however want debt relief such as to detract credit card payments, prevent a
wage garnishment, stop litigation, or the ones who have non-dischargeable
debts, for example – child support arrears or alimony what they would be OKAY
to settle over three to five years, or fell behind on car or house payment and
now want to be involved on missed payments and retain the property.
Why is ‘bankruptcy attorney
consultation’ highly advisable?
Bankruptcy, just as most legal events,
is better approached under the guidance of an experienced attorney throughout.
A reputed and experienced bankruptcy
attorney will assure you of absolute peace as they provide you with the
following:
·
Conducting initial consultation – typically
free! – to have an understanding of your case
· Advising you on various options available,
including what type of bankruptcy you should file
Doing all essential paperwork vital to
bankruptcy filing
·
Representing once the case goes to court.
Your bankruptcy process will start off
with a half-an-hour of interview between you and your prospective attorney. In
case you are married, both partners have to attend, so all concerns could be
responded accurately and honestly.
If you make up your mind to file
bankruptcy already, the very next step would be expecting your lawyer to
complete all the paperwork with the court. Bear in mind that the attorney is
here to secure as many of your assets as they could, so pipe up on what is
imperative.
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