Beginner’s Guide to Chapter 7 and Chapter 13 Bankruptcy
The most common type of bankruptcies filed in the U.S. are Chapter 7 and Chapter 13 cases. The choice of bankruptcy to be filed highly depends on income, debts, assets, and a person’s financial goals. What is Chapter 7 bankruptcy? 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. However, for those who make too much money may file a Chapter 13 bankruptcy instead of Chapter 7. 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. For people with a steady or regular source of income, they can still file a bankruptcy case under the Chapter 13 bankruptcy and pay a portion of their debts through a flexible and realistic 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. The Chapter 13 bankruptcy case is recommended for those who simply want to catch up on a missed car payment or mortgage loan, or in paying off non-dischargeable debts such as child support arrears or alimony. When it comes to filing, Chapter 7 bankruptcy involves preparation of a large set of forms and navigation of tricky legal matters that will require 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. That is why Chapter 7 bankruptcy is also known as “no asset” bankruptcy. If an unemployed homeowner has a home but the value is less than the amount of the lien, the debtor has no equity in the bankruptcy estate, thus the house is protected from liquidation, and filing a Chapter 7 can help the debtor seek relief from all of his unsecured debts. You can visit our homepage or website now to learn more about Chapter 7 and Chapter 13 bankruptcies. 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.