Types of Bankruptcies: Chapter 13 and Chapter 7

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Types of Bankruptcies: Chapter 13 and Chapter 7

There are 2 kinds of bankruptcy: “liquidation” and “reorganization”. In a liquidation bankruptcy, your nonessential property items may be sold to pay down your debt, and most or all of your debts may be wiped out. The liquidation bankruptcy is called Chapter 7 bankruptcy, and it can be filed by individual (a “consumer” Chapter 7 bankruptcy) or business (a “business” Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically last 3 to 6 months.

Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, you got to cancel, or “discharge”, certain types of debts. In return, however, you must be willing to give up certain types of property, to be sold for the benefit of your creditors. In fact, most Chapter 7 filers get to keep most or all of the property they need to get on with their lives, because the law considers it necessary for a fresh start.
The typical Chapter 7 bankruptcy case takes between 3 and 6 months from filing to discharge. It costs $209 in filing and administrative fees, and it commonly requires one physical appearance at what’s called a “creditors’ meeting”.

Chapter 13 Bankruptcy
Chapter 13 bankruptcy, sometimes called the wage earner’s plan is quite different from Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you use your income to pay some or all of what you owe to your creditors over time. Most Chapter 13 bankruptcies last 3 years. Some last longer, a court can approve a case as long as 5 years. A few are shorter, if you pay off 100% of your debts in less than 3 years, your case will be over sooner.
Chapter 13 bankruptcy isn’t for everyone. If your income is too low or irregular, you may not be eligible. To file for Chapter 13 bankruptcy, you must have a steady income.
If your total debt burden is too high, you are also ineligible. Your secured debts cannot exceed $922,975 and your unsecured debts cannot be more than $307,675. A “secured debt” is one that gives a creditor the right to take a specific item of property (such as your house or car) if you don’t pay the debt. An “unsecured debt” doesn’t give the creditor this right. Common examples of unsecured debts are credit card and medical bills.

Bankruptcy Is it the right solution to your debt problems? Attorney Robin Leonard

Types of Bankruptcies: Chapter 13 and Chapter 7

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.