Introduction
When filing for bankruptcy, you have the option of filing a Chapter 7 or a Chapter 13. Both offer protection from creditors, but there are some areas where they differ. It is important to weigh all of your options and research bankruptcy information, before filing. If you find that you need to file, look at both chapters to see which one will suit your needs.
Step 1
There are bankruptcy laws in place that help people that can no longer pay his or her creditors. The laws provide for a person to get a fresh start financially by liquidating assets to pay one's debts or by creating a payment plan that fits one's budget. The following bankruptcy information will help you determine which Chapter is the correct choice for your situation.
Step 2
This protection is better when you have few assets minus necessities such as clothing and furniture and it is preferable when there is little or no money left over after paying monthly expenses. Most of the unsecured debts will be completely eliminated, but expenses such as student loans may or may not be eliminated. When you file, the process moves along quickly and it may only take a few months to go through a Chapter 7 bankruptcy. Creditors will not be able to contact you after the debts are discharged. They are also not able to contact you during the entire process unless the trustee of the court gives them permission. People are required to take a means test, which qualifies or disqualifies a debtor from filing a Chapter 7. A meeting with a creditor counselor is also required before filing.
Step 3
A Chapter 7 bankruptcy is the most severe type of bankruptcy and can be used by people and businesses. All unsecured debts are eliminated, with some being paid if there is money left after paying the secured debts. A lawyer should be contacted for bankruptcy information and filing assistance.
Step 4
Chapter 13 Bankruptcy protection is better if you have substantial equity in property or other assets you want to protect and keep. It is preferable to people who have steady and regular income, but find it hard to keep up with their payments. Chapter 13 will help you catch up with late payments. You are able to keep most of your assets and property while making affordable monthly payments to catch up the past due amounts. Bankruptcy information states that it takes three to five years to complete a Chapter 13 payout. The payments are scheduled according to an agreement between you and the bankruptcy trustee. You will have no contact with creditors during the three to five years of payments and you will make monthly payments to the court. The payments will be distributed among your creditors. Anyone with unsecured debts below $360,475 and secured debts under $1,081,400 can file for a Chapter 13 bankruptcy.
Step 5
Choosing to file for bankruptcy could be tough decision that one has to make when they are in financial trouble. If a person is finding it hard to pay his or her debts, bankruptcy is certainly an option that they should consider. A Chapter 13 bankruptcy is used by wage earners and small businesses. This type of bankruptcy delays and reduces the amount paid to creditors over a period of time. A lawyer should be contacted for bankruptcy information and filing assistance.
Tips and Comments
Bankruptcy information states that a United States Trustee is appointed by the country Attorney General for each region for a five year term. The trustee is responsible for the administration of bankruptcy cases. An automatic stay is imposed after a bankruptcy petition is filed. It prohibits collection actions of creditors. A debtor may choose to use either federal exemption list or the state exemption list. The exemption laws vary greatly from state to state. Research bankruptcy information before retaining an attorney to file your bankruptcy.
