Beginner’s Guide to Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 cases are the most common type of bankruptcies filed in the United States. There are several factors you have to consider when filing a bankruptcy including the assets, income, debt, and an individual’s financial goals. What does Chapter 7 bankruptcy mean? Chapter 7 refers to the liquidation bankruptcy which aims to eliminate all general unsecured debts such as medical bills and credit cards. Those who earn much money will be required to file a Chapter 13 bankruptcy instead. 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 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. 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. 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. While simple cases of Chapter 7 bankruptcy can be resolved without a bankruptcy lawyer, complex cases involves preparation of a large set of forms and navigation of tricky legal issues that requires 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 why Chapter 7 bankruptcy is also known 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.