All You Need to Know About Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 cases are the most common type of bankruptcies filed in the United States. 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. However, for those who make too much money may file a Chapter 13 bankruptcy instead of Chapter 7. Generally, the Chapter 7 bankruptcy is recommended for low-income debtors since they have little or no asset to liquidate in paying their unsecured debts.
When a person files a Chapter 7 bankruptcy, a trustee is usually appointed to review the bankruptcy papers and documents and sells the debtor’s nonexempt properties to pay the creditors, and if there are no assets to sell, the 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. The debtor gets to keep all his properties including those 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. Chapter 13 bankruptcy is highly recommended for those who want to catch up on missed car payments or mortgage loans, or in paying off non-dischargeable debts such as arrears in child support or alimony. 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. Learn more about the Chapter 7 and Chapter 13 bankruptcy by visiting our homepage or website now. Know your rights in the justice system, because it is always good to know your options when it comes to filing a bankruptcy case, and you can always hire a bankruptcy lawyer to help you process your case.