The decision about the type of bankruptcy that is good for you is an important choice because the type of bankruptcy will determine if you will repay at least part of your debts. However, in some cases, you will not be eligible for one of the types of bankruptcy or for the other, so you will not be able to choose the type of bankruptcy you will use.
Learn more about Chapter 7 and chapter 13 bankruptcy lawyers
After you have decided to file for bankruptcy, you may go to bankruptcy-basics and choose between two types of bankruptcy procedures that are available to individuals – Chapter 7 bankruptcy and Chapter 13 bankruptcy – depending on your eligibility for each of them.
In other words, you will not have to pay most of your debts. In return, the bankruptcy trustee, who is the person appointed by the court to administer bankruptcy proceedings, can take the property you own (with some exceptions), sell it, and with the proceeds pay your creditors, or the people to whom you owe the money. For example, if you own a home with little or no value in it, and you owe a mortgage on that house, the bankruptcy trustee can sell the house and give any returns to the bank that carries the mortgage debt.
On the other hand, Chapter 13 bankruptcy requires that you pay all, or at least part, of your debts
As a result, Chapter 13 is like a payment plan that can be extended for several years. The amount you have to pay, and the time period for doing so, will vary according to the amount of the amounts you owe, your ability to pay debts, and the amount of property you own. So, in this type of bankruptcy, your property typically does not sell; you keep it, as long as you comply with the terms of the payment plan.
However, as indicated above, there are income limitations when filing for Chapter 7 bankruptcy, and limitations on the debt in Chapter 13 bankruptcy. These limitations have become stricter under the new bankruptcy laws. If you have filed for bankruptcy under Chapter 7 or under Chapter 13, for example, there are time limitations on how soon you can file again under Chapter 7 bankruptcy.
There may be some strategic reasons for choosing Chapter 7 over Chapter 13
Obviously, Chapter 7 bankruptcy, if you qualify, will give you the best chance to have a fresh restart, since you will not have to pay most of your debts. If you are behind on your mortgage payments or the loan for the purchase of a car and you really want to keep your home and your car, it will depend on the values you have in each one of them. Even more, if you have a lot of debts that you can not discharge in Chapter 7 bankruptcy, such as student loans or child support, then when filing for bankruptcy under Chapter 13, you can pay off those debts over time, which will help you with your financial situation.
Speak Today with a Qualified Lawyer in Bankruptcy
This article aims to be useful and informative. But legal issues can be complicated and stressful. A bankrupt Lawyer can meet his particular legal needs, explain the law and represent him in court. Take the first step now and contact a bankrupt Lawyer near you to discuss your specific legal situation.