Personal Bankruptcy

Chapter 7 & Chapter 13

Personal Bankruptcy
Did you know that there are four different types of bankruptcy that you may qualify for? Let me help you decide which is right for you.

CHOOSING THE RIGHT BANKRUPTCY

Declaring bankruptcy is a major decision – one that will change your life, usually for the better! Not everyone qualifies to simply have their debts forgiven and not all debts are forgiven.



Your choice of personal bankruptcy is based upon both your needs and your financial condition. The clear majority of individuals file either Chapter 7 or Chapter 13 bankruptcy.

WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 AND CHAPTER 13?

Chapter 7 Bankruptcy

If you file for Chapter 7 bankruptcy, most of your unsecured debts will be forgiven within 90 days from filing. 


The bankruptcy will stay on your credit report for ten years. While your debts will typically be forgiven, depending on your assets, you may have to liquidate some of your property, with the proceeds of the liquidation paid to your creditors. 


In most cases, however, this is not the case and debts are simply forgiven without the loss of any property.


You might be a candidate for Chapter 7 if you have no assets to lose and if your income is below the median income for your household size, or if you have no money left to pay your debts.


Today’s bankruptcy rules impose requirements for filing the potentially more desirous Chapter 7 bankruptcy. According to these rules, you qualify for Chapter 7 only if your average income, for the six months before filing for bankruptcy, is lower than your state’s median income. The majority of bankruptcy filers do qualify for Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

Chapter 13, on the other hand, is a repayment plan that lasts, normally, between three to five years. 


Chapter 13 bankruptcy remains on your credit report for seven years. 


With this type of bankruptcy, you get to keep all your property. If you have substantial assets, you may have to consider this type of bankruptcy, even if, financially, you may qualify for Chapter 7.



Chapter 13 is, typically, recommended for individuals who have fallen behind on their car or mortgage payments because of a temporary problem, such as a job loss, but who could get back on track if given time to catch up. 


After filing Chapter 13, a repayment plan is established that helps you catch upon on or repay your debts and also eliminates all interest payments on unsecured debts.



To determine if you want to file for bankruptcy, or what bankruptcy is best for you, feel free to contact us for a free consultation with a bankruptcy attorney.