Understanding Chapter 13 And Chapter 7 Bankruptcy
Chapter 13 of the bankruptcy code gives debtors the opportunity to repay some or all of the debts that are in their name, in better terms, lower or no interest. Debtors have the ability to use income they have in the future to pay off creditors.
How Chapter 13 Works
A time frame of 5 years is allotted for debtors to be able to pay of their creditors in full. Your attorney will safeguard your interests, while the entire process is carried out under court supervision. A new payment plan is approved by the court, which allows debtors to repay their creditors and still retain all of their property, unlike Chapter 7 bankruptcy. A list of transactions and time duration is created for this process. Thirty to forty-five days after the case has started, payments must begin to be made.
Making Sure Chapter 13 Is The Right Choice
To qualify for Chapter 13 you must have a regular source of income. You will need to prepare a budget, fill out forms and leadings, and appear for meetings with creditors and court hearings. After all of your payments have been made in full you will be eligible to receive a discharge from your debts and the plan will be terminated. To know if Chapter 13 Bankruptcy is the right choice for your financial interests, you will first need to fill out an evaluation form as with all Chapters of Bankruptcy. Your attorney will review your form and be able to guide you towards Chapter 13 or the solution that best fits your financial situation.
Chapter 7 Bankruptcy is known as straight bankruptcy as well as liquidation (converting assets into money) and it is the most common form of bankruptcy. Most, if not all debts are discharged within months of your attorney filing a bankruptcy petition. Chapter 7 of the bankruptcy code allows debtors who are in need of discharging debts within a situation of financial emergency to become free and clear of these debts and to become able to begin a fresh new financial start.
How Chapter 7 Works
The way Chapter 7 bankruptcy works is that a trustee is assigned to collect and to sell assets and non-exempt property to distribute the proceeds from these items to pay off creditors. In Chapter 7 the debtor receives a discharge from all dischargeable debts (credit card debt, medical bills, etc.)
Note: Some debts are considered non-dischargeable and filing bankruptcy will not get rid of such debts. These may include child support or alimony, some forms of taxes, and student loans under the filing of chapter 7 Bankruptcy.
Making Sure Chapter 7 Is The Right Choice
To know if you are eligible or to understand if Chapter 7 bankruptcy is right for your situation you must first complete an evaluation form. This form will have questions regarding your debt and financial situation. By filling this form out completely and accurately, your attorney will be able to review your financial situation and provide you with an answer on if Chapter 7 bankruptcy will be the best choice for you. If Chapter 7 is the right choice for your financial well being, your attorney will explain all the rules and procedures and will be able to process your bankruptcy petition.
Call us today and speak directly with an attorney for a free, no obligation, consultation to see if you qualify for bankruptcy and if it is the right decision for you and your family.
Wessler Law Firm is a small family owned law firm specializing in bankruptcy law since 1982.
Disclaimer: This article is meant for reference only, and is not intended to be legal advice.
For legal counsel regarding your situation, please consult an attorney licensed in your state.