Beginner’s Guide to 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. There are several factors you have to consider when filing a bankruptcy including the assets, income, debt, and an individual’s financial goals. What is the meaning of 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. However, for those who make too much money may file a Chapter 13 bankruptcy instead of Chapter 7. 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. When you file a Chapter 13 bankruptcy, you get to keep all your properties including your assets that are nonexempt. The Chapter 13 bankruptcy is designed for debtors who can pay a portion of their debt, and the amount depends on the income, expenditures, and other types of debts. 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.
A debtor can file Chapter 7 bankruptcy is he is unemployed, no car, just renting an apartment, and one who is experiencing medical emergencies, death of a family member, or divorce, because this is the fastest and easiest way to get rid of all his debts. That is the very reason why Chapter 7 bankruptcy is also called as “no asset” bankruptcy. For unemployed homeowners with a house value lesser than the lien against it, the house is technically protected from liquidation, and filing a Chapter 7 can help them relieved of their obligations. You can visit our homepage or website now to learn more about Chapter 7 and Chapter 13 bankruptcies. 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.