Chapter 7 Vs. Chapter 13 Bankruptcy
If you are overwhelmed with debt you may think bout filing bankruptcy. The aim of such as an action is to discharge your existing debts by repaying a portion or all of your debts, and allow you to have a fresh financial start. In other words, once your discharge is granted, you no longer need to repay the debts that you had before bankruptcy was filed. Assuming you consider appropriate to file a bankruptcy, the right way to determine which Chapter to file under is to analyze each Chapters and also consult with an experienced bankruptcy attorney. Chapter 7 and Chapter 13 are the two main options available to consumers under the bankruptcy laws. · Chapter 13 is worth considering when your net monthly income exceeds your net monthly expenses by much. By filing Chapter 13 Bankruptcy, your monthly payments will usually be lower than before. Moreover, in only three years you won't have any more debts! The second main reason for you to choose the Chapter 13 Bankruptcy is to retain certain assets (for example, your home) that might otherwise be liquidated by a chapter 7 Bankruptcy. · If you have a student loan, a tax obligation or other debt that cannot be discharged in Chapter 7, you may include these debts in your Chapter 13 Bankruptcy plan and pay them off in time. · Another good reason to choose Chapter 13 Bankruptcy is a sincere desire to repay your debts completed by the need the protection of the bankruptcy court to do so. Chapter 13 process provides the formal structure and some new deadlines which will help you follow through on your good intentions. · One last reasons, but, as you will see as important as the other ones, is the ineligible for filing Chapter 7 Bankruptcy. There are certain requirements imposed by the 2005 revisions to the bankruptcy law in order to be able to file for Chapter 7 Bankruptcy, starting with "means test" that you have to pass. To sum it up, Chapter 13 Bankruptcy will protect you from the collection efforts of creditors, like all other Chapters and furthermore will allow you to keep your real estate and personal property; it also provides individuals the chance to repay their debts through reduced payments. We should also take in consideration the time limit restraining the debtor from filing another Chapter 7 or Chapter 13 case. While the Chapter 7 filers must wait six years to file another Chapter 7 Bankruptcy there is no time restraint if they wish to file a Chapter 13 Bankruptcy. Regardless of the advantages mentioned previously most people who file for bankruptcy choose Chapter 7 because it's effective, fast, easy to file, inexpensive, and doesn't require payments over time. Usually a Chapter 7 case takes no longer then six months, after which you will be debt-free except for car payments ,a mortgage, and other few types of debts that "survive bankruptcy", such as recent taxes ,student loans, and back child support. Although you can lose property by filing Chapter 7 Bankruptcy, most people don't. The case when an individual debtor has no assets to satisfy any portion of his creditors' claims is called a "no-asset" case. In this event, the bankruptcy court will hold a discharge hearing after which if there are no objections to discharge filed by creditors, the court will cancel immediately the debts mentioned in the petition. You are then no longer demanded to pay for those debs. Actually, the fact Chapter 7 doesn't require you to repay any portion of your debts, as Chapter 13 do, is the main reason most for people o choose this type of bankruptcy. Furthermore the Chapter 13 obliges you to complete the entire three- to five-year repayment plan in order to have your remaining debts discharged (unless, for hardship reasons, the court lets you off the hook early). A great number of those who file for Chapter 13 are unable to complete their plans. In collusion, we can observe that every Chapter his strong points; Despite this, the specialists think that there are some good reasons why people who are eligible for both types of bankruptcy choose to use Chapter 13. |
