All You Need to Know About 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 is the meaning of Chapter 7 bankruptcy? 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. Chapter 7 bankruptcy is specifically designed for low-income debtors without that much asset to liquidate to pay off unsecured debts.
Once a person filed for a Chapter 7 bankruptcy, a trustee is appointed to review the bankruptcy documents and sells the debtor’s nonexempt properties to pay the creditors, and if there are no assets to sell, the creditors receive nothing. 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. If you want to catch up on a missed auto payment or mortgage loan, or in paying off non-dischargeable debts like child support arrears or alimony, you can file a Chapter 13 bankruptcy. While there are simple cases of Chapter 7 bankruptcy, you may need to hire a bankruptcy lawyer for complex cases involves preparation of a large set of forms and navigation of overwhelming and confusing legal matters.
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. 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. Find out more about Chapter 7 and Chapter 13 bankruptcies by checking our homepage or website now. It is always good to know your options when it comes to filing a bankruptcy case, and you can always seek the help and expertise of a bankruptcy attorney.