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. 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 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. Those who earn much money will be required to file a Chapter 13 bankruptcy instead. The Chapter 7 bankruptcy is ideal for low-income debtors with little or no 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. 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. A person can keep all his properties including those assets that are nonexempt under the Chapter 13 bankruptcy. 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. 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 the very reason why Chapter 7 bankruptcy is also called as “no asset” bankruptcy. For unemployed homeowners with a house value lesser than the lien against it, the house is technically protected from liquidation, and filing a Chapter 7 can help them relieved of their obligations. 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.