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. The choice of bankruptcy to be filed highly depends on income, debts, assets, and a person’s financial goals. What does Chapter 7 bankruptcy mean? One requirements for Chapter 7 bankruptcy is little or no disposable source of income in order to help an individual wipe out all his 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. The Chapter 7 bankruptcy is ideal for low-income debtors with little or no asset to liquidate to pay off unsecured debts.
Once a person filed for a Chapter 7 bankruptcy, a trustee is appointed to review the bankruptcy documents and sells the debtor’s nonexempt properties to pay the creditors, and if there are no assets to sell, the creditors receive nothing. 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. The debtor gets to keep all his properties including those assets that are nonexempt. 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.
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. Chapter 7 bankruptcy is also referred to as “no asset” bankruptcy. Unsecured debts are relieved under the Chapter 7 bankruptcy, and if the unemployed homeowner has a house but the value is less than the amount of the lien, the debtor has no equity in the bankruptcy estate, and his house is protected from liquidation. Find out more about Chapter 7 and Chapter 13 bankruptcies by checking our homepage or website now. It is always good to know your options when it comes to filing a bankruptcy case, and you can always seek the help and expertise of a bankruptcy attorney.
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