Bankruptcy chapter 7 and 13
In the United States, there are two main ways in which you can file a personal bankruptcy. We have Chapter 7 and Chapter 13 as the choices. These two ways are beneficial depending on the situation.
Bankruptcy Chapter 7 or Discharge Unsecured Debts is the better choice if you are running low on cash after you have paid the basic expenses each month. This is also good if you are not meeting basic expenses. Chapter 13 and Chapter 7 personal bankruptcy must be filed in federal bankruptcy court. As of year 2000, you need to pay fee of $160 when seeking for bankruptcy relief. This is made up of $130 filing fee and an administrative fee of $30. Attorney’s fee is also an additional.
Bankruptcy Chapter 13 is essential for people with a steady income to keep their property. This includes mortgage house or a car, properties that they might lose had they hot filed for a Bankruptcy Chapter 13. In this kind of personal bankruptcy, the court gives the go signal for a repayment plan, allowing a person to use his or her future income in paying a default during a three-to-five-year period. This is done rather than surrendering any property. As soon as the person settles all his or her accountabilities under the plan, he or she will then receive a discharge of the debts.
Chapter 7 type of bankruptcy, on the other hand, is known as straight bankruptcy. It involves a liquidation of all assets that are not exempt. When we say exempt property, we mean all properties including automobiles, basic household furnishings, work-related tools and others. Some of these properties may be sold by an official that is appointed by the court, a trustee or may be turned over to the person’s creditors. A discharge of debts may only be received once in six years.
When you file for a Chapter 7 bankruptcy, you are obliged to pay for your debts out of the nonexempt assets that you have. Chapter 13 bankruptcy will allow you to pay your debts out of your future income. This results into a repayment plan under the Chapter 13 bankruptcy. Most of the time, Chapter 13 allows a person to pay off the debt for a longer time as compared to Chapter 7 where the person pays off more of the debts and deal with secured creditors a lot easier. Secured creditors include home mortgage lenders, companies that provide financing for car and truck purchase and others. For a Chapter 7 plan, repayment period is permitted usually for three years for people who have an income of below median, and five years for debtors who have a disposable income of above median.
In conclusion, Chapter 13 bankruptcy or Interest-free repayment plan is for those who have a regular income and can pay for their living expenses but cannot keep up the scheduled payments of their debts. Chapter 7 or Discharge Unsecured Debts is for those who have little or no money left after paying for basic expenses in each month or not meeting the basic expenses. Creditors are not allowed to contact you while the automatic stay is in the effect. On the other hand, Chapter 13 bankruptcy allows you to make one monthly payment to the bankruptcy trustee for distribution.
Summary:
1. Bankruptcy Chapter 13 is essential for people with a steady income to keep their property. This includes mortgage house or a car, properties that they might lose had they hot filed for a Bankruptcy Chapter 13.
2. Chapter 7 type of bankruptcy, on the other hand, is known as straight bankruptcy. It involves a liquidation of all assets that are not exempt.