All You Need to Know About Chapter 7 and Chapter 13 Bankruptcy
When it comes to the most common type of bankruptcies filed in the U.S. they are Chapter 7 and Chapter 13 cases. The choice of bankruptcy to be filed highly depends on income, debts, assets, and a person’s financial goals. What is Chapter 7 bankruptcy? Chapter 7 refers to the liquidation bankruptcy which aims to eliminate all general unsecured debts such as medical bills and credit cards. If you make a lot of money, you may still file bankruptcy under Chapter 13. Chapter 7 bankruptcy is specifically designed for low-income debtors without that much asset to liquidate to pay off unsecured debts.
When you file a Chapter 7 bankruptcy, a trustee is usually appointed to review your bankruptcy case, selling your nonexempt properties to pay the creditors, and if ever there are no assets or properties to liquidate or sell, your creditors will not receive anything. Chapter 13 bankruptcy recognizes that there are types of debtors who can pay a portion of their debts with the help of a repayment plan. A person can keep all his properties including those assets that are nonexempt under the Chapter 13 bankruptcy. The amount a debtor needs to pay under the Chapter 13 bankruptcy is based on the income, other debts, and expenses. If you want to catch up on a missed auto payment or mortgage loan, or in paying off non-dischargeable debts like child support arrears or alimony, you can file a Chapter 13 bankruptcy. When it comes to filing, Chapter 7 bankruptcy involves preparation of a large set of forms and navigation of tricky legal matters that will require the help of a lawyer.
If you are an unemployed debtor without a residential property or your own home, no car, and no asset at all, the most effective and fastest way to get rid of your debt is through Chapter 7 bankruptcy. Chapter 7 bankruptcy is also referred to as “no asset” bankruptcy. If an unemployed homeowner has a home but the value is less than the amount of the lien, the debtor has no equity in the bankruptcy estate, thus the house is protected from liquidation, and filing a Chapter 7 can help the debtor seek relief from all of his unsecured debts. Find out more about Chapter 7 and Chapter 13 bankruptcies by checking our homepage or website now. When it comes to filing a bankruptcy case, it is always nice to know that you have legal options available, and if you are in doubt, you can always seek the help and expertise of a bankruptcy lawyer.