Chapter 7 and chapter 13 bankruptcy: Everything you need to know

Times when debt becomes unmanageable, bankruptcy might seem like the best option to have a fresh financial start. Now, chapter 7 and Chapter 13 being the most common bankruptcy it is evident that differing them might get confusing.

To help you out of the same confusion, this article focuses on highlighting the key differences, defining them and providing you detailed information in each of the sections and help you get an affordable bankruptcy attorney kissimmee.

How Does Bankruptcy Work?

A major part of understanding Chapter 7 and Chapter 13 bankruptcy is knowing how bankruptcy works in the first place. Well, bankruptcy is a legal process which aims at protecting individual’s, couples as well as businesses from any financial ruin caused by overwhelming debt.

While we say most debts can be eliminated, it is essential to note that there are certain debts that cannot be discharged though either Chapter 7 or Chapter 13 bankruptcy like unpaid alimony and child support payments, criminal fines or student loans.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

We know that both Chapter 7 and Chapter 13 holds the potential to offer debt relief, but they do stand differently to meet your unique financial standings. Primarily, Chapter 7 bankruptcy is also called “straight bankruptcy” while Chapter 13 “wage-earner’s bankruptcy”.

Moreover, even though both allow you to eliminate debt neither can discharge certain taz responsibilities, child support, or alimony.

To have a better understanding of how each of these methods work, here’s a side-by-side comparison of the two that can help you choose the best option for you:

CHAPTER 7	CHAPTER 13
Debtors are suppose to sell their non-exempt assets to pay off creditors.	Whereas in Chapter 13, a filters create a repayment plan were they get to keep their non-exempt property as long as they pay an equal amount to the creditors.
A chapter 7 file stays in your credit report for 10 years.	Chapter 13 bankruptcy file on the other hand remains on your report for 7 years.
Chapter 7 bankruptcy is a quicker process and discharges debt within 3-5 months.	Contraditly, Chapter 13 takes around 5 years before debts are discharged.
Both individuals and business entities can file a Chapter 7 bankruptcy.	A chapter 13 bankruptcy can be filed by only individuals.

How do I file for bankruptcy?

Now that you know the details of Chapter 7 and Chapter 13 bankruptcy, the immediate next question that arises is how can you file for bankruptcy. While the federal government has a process of filing bankruptcy, we advise our consumers to go through the credit counselling for making the right choice.

Here’s a guideline on how to file for bankruptcy:

Find government-approved credit counsellors and enrol for complete credit counselling.
Obtain your filing papers on the US Bankruptcy Court Website.
File the papers in court with a filing fee of $338 for Chapter 7 and $313 for Chapter 13.
Meeting your lenders and analysing your financial situation.
Finalising the payments to lenders with the bankruptcy trustee with remaining debts being discharged.

We hope this helps you guide through the filing process and make the whole process smooth.

Conclusion

In conclusion, we understand that battling bankruptcy surely gets challenging and to overcome the same challenges Chapter 7 and Chapter 13 bankruptcies act as a valuable tool. Be it for individuals, families or even businesses both these methods offer a financial reliance in their own fashion. Hence, having a firm understanding of these options could assist you greatly in a fresh start to rebuild your financial future.

References: