Chapter 7 vs Chapter 13 Bankruptcy | Start Fresh Today

When it comes to filing for bankruptcy, you face several options. Choosing the appropriate filing for your situation can seem difficult, as it often depends on the consumer's type of debt, income, and property. While we'll go over a few of the choices here, a local bankruptcy attorney can help you navigate your bankruptcy, and provide counsel on the specifics of your case.

To start with, there are two major types of consumer bankruptcy to consider: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is typically geared towards consumers with low income and lots of unsecured debt, while Chapter 13 bankruptcy may be better for those with regular income and non-exempt property.

Let's discuss these two options in a little more detail, starting with Chapter 7.

In Chapter 7 bankruptcy, debtors can have most of their unsecured debts discharged.

Unsecured debts are those that aren't attached to physical collateral, including credit card debt and medical bills. When a consumer's debts are discharged, they don't have to pay them, they can't be reported as delinquent on credit reports, and anyone who tries to collect them can face bankruptcy court sanctions.

In Chapter 7 bankruptcy, property can be liquidated to pay some debts, but there are exemptions that cover most or all of the property that most bankruptcy petitioners own. Most secured debts, like car loans and mortgages, must be paid, or the property surrendered.

There are several options for managing secured debts:

Reaffirmation, in which the debtor agrees to keep paying off debts. Redemption, in which the debtor pays a flat amount and in turn keeps the property. And surrender, in which the debtor returns the property, and the debt becomes unsecured and often dischargeable.

Most people who file for Chapter 7 bankruptcy have a lot of unsecured debt and have little property of value.

Chapter 13 bankruptcy, on the other hand, is often filed by consumers who have more available income. Chapter 13 gives the debtor time to catch up on past-due amounts, while maintaining current bills. Current bill payments are based on the debtor's current income.

Chapter 13 bankruptcy prioritizes secured debts, and can help save homes, automobiles, and other secured property. Unsecured debts like credit card debt and medical bills can be paid after secured debts. If a debtor pays off secured debts according to the Chapter 13 agreement, then most remaining unsecured debts can be discharged.

Chapter 7 and Chapter 13 bankruptcy meet different needs for different consumers.

To choose the right bankruptcy filing, consumers need to take a close look at their debts, income and property. A local bankruptcy attorney can help, by reviewing your specific financial circumstances, and advising you about which bankruptcy protection might be best for you.

Category:

Education

Tags:

• Start Fresh Today
• Chapter 7
• Chapter 13
• bankruptcy
• personal bankruptcy
• debt
• bankruptcy attorney

[forged420a]

Great video