What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?
A Chapter 7 Bankruptcy will get rid of all of your debts in one procedure. A Chapter 13 Bankruptcy will force your debts into a repayment plan. Why should you choose a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy? A Chapter 7 Bankruptcy is probably better if you qualify for it. The problem is that not everyone qualified for a Chapter 7 Bankruptcy.
In order to determine if you qualify for a Chapter 7 Bankruptcy the Court will look at your income (what you make) and your assets (what you own). If your income is unusually high then the Court may not allow you to file for a Chapter 7 Bankruptcy. In order to determine if your income is too high they will look at your household income for the prior six months. They will then compare that income to the average income for a family of your size. They will also take into account any special expenses you have, such as child support, medical expenses and school.
In determining if a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy is right for you, your Bankruptcy lawyer will also need to look at your assets. In a Chapter 7 Bankruptcy you can usually keep your house, cars and personal goods. However, there are limits to this. If you have a large amount of equity in your house (i.e. if you could sell it for a very large profit) or if you have very valuable personal goods, you may want to file a Chapter 13 Bankruptcy.
Under a Chapter 13 Bankruptcy your possessions are protected no matter how much they are worth. Even very expensive assets can be kept under a Chapter 13 Bankruptcy.
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Monday, November 14, 2011
What is a Chapter 13 Bankruptcy?
What is a Chapter 13 Bankruptcy?
Under a Chapter 13 Bankruptcy process, your debts are restructured to enable you to pay off your creditors with your future earnings. A Chapter 13 Bankruptcy Plan will be devised for you to repay your creditors. You will pay them off, usually with no interest, over a period of three to five years.
The monthly payment is based in part on your income and your ability to pay. The creditors will be paid off at different rates depending on your case. Depending on your income you will be held liable for all or just a portion of your debts.
In some cases the Chapter 13 trustee will pay the creditors as little as 10% of the amount you owe. Once the Chapter 13 Bankruptcy is complete the unsecured creditors can never ask for any more.
In a Chapter 13 Bankruptcy you will make one payment to a Chapter 13 trustee. The trustee will use that money to pay all of your creditors. This will give you one easy payment to make each month.
The goal of the Chapter 13 Bankruptcy is to give you a reasonable payment that will put you back on the right track and give you a set date when you know you will be out of debt.
Under a Chapter 13 Bankruptcy process, your debts are restructured to enable you to pay off your creditors with your future earnings. A Chapter 13 Bankruptcy Plan will be devised for you to repay your creditors. You will pay them off, usually with no interest, over a period of three to five years.
The monthly payment is based in part on your income and your ability to pay. The creditors will be paid off at different rates depending on your case. Depending on your income you will be held liable for all or just a portion of your debts.
In some cases the Chapter 13 trustee will pay the creditors as little as 10% of the amount you owe. Once the Chapter 13 Bankruptcy is complete the unsecured creditors can never ask for any more.
In a Chapter 13 Bankruptcy you will make one payment to a Chapter 13 trustee. The trustee will use that money to pay all of your creditors. This will give you one easy payment to make each month.
The goal of the Chapter 13 Bankruptcy is to give you a reasonable payment that will put you back on the right track and give you a set date when you know you will be out of debt.
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