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? One requirements for Chapter 7 bankruptcy is little or no disposable source of income in order to help an individual wipe out all his general unsecured debts such as medical bills and credit cards. If you make a lot of money, you may still file bankruptcy under Chapter 13. Chapter 7 bankruptcy is specifically designed for low-income debtors without that much asset to liquidate to pay off 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. When you file a Chapter 13 bankruptcy, you get to keep all your properties including your assets that are nonexempt. The amount you need to pay highly depends on your 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.
If you are an unemployed debtor without a residential property or your own home, no car, and no asset at all, the most effective and fastest way to get rid of your debt is through Chapter 7 bankruptcy. 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. Find out more about Chapter 7 and Chapter 13 bankruptcies by checking 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.