What is the difference between a chapter 7 and a chapter 13 bankruptcy?
Generally a chapter 7 Bankruptcy is used to wipe out (“discharge”) as many debts as possible and to give you a fresh start. A Chapter 13 Bankruptcy is used if you are behind on payments on a secured debt (for example your home mortgage) and you want a chance to catch up with the overdue payments or if you have too many possessions to file a Chapter 7 Bankruptcy. We will go over your options with you in a free office consultation. Will I Lose My Possessions if I file Bankruptcy? The Bankruptcy laws included “exemption” rules which permit you to keep a certain amount of property – including your personal property – even if you are wiping out your debt. There are limits to the amount of property you can keep, but most individuals keep all of their possessions. Can Bankruptcy stop a wage garnishment? Once you have filed a Bankruptcy, all lawsuits are automatically stopped and all garnishments must immediately cease. Our office will make sure that your garnishment is stopped promptly. Will
In a Chapter 7 bankruptcy, the bankruptcy trustee takes any non-exempt (unprotected) property you have and gives it to your creditors. All of your dischargeable debt goes away when the Court enters your discharge order. Your attorney can tell you before you file a Chapter 7 if you have any non-exempt property; if all your property is exempt, the Trustee will not take anything from you and you will still receive a bankruptcy discharge. A Chapter 13 bankruptcy includes a plan in which you make monthly payments to the Trustee, who distributes this money to your creditors. People file a Chapter 13 when they make too much money to file a Chapter 7, or if they are late on payments on secured debt (like a car or house) but want to keep the property, or have a type of debt which will discharge in a Chapter 13 but not a Chapter 7. You must have a regular monthly income, with some money left at the end of the month to make your plan payments, to be a Chapter 13 debtor. You must make monthly plan
Bankruptcy is a legal proceeding in which people who cannot pay their debts can get a fresh financial start. The right to file for bankruptcy is provided by federal law and all bankruptcy cases are handled by in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. Most people filing bankruptcy will file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly. Chapter 7 is known as the “straight” bankruptcy or “liquidation” in which you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most cases all of your property will be exempt. But property which is not exempt is sold, with the money distributed to the creditors. If y
A Chapter 7 is known as a liquidation bankruptcy whereas a Chapter 13 is a reorganization bankruptcy. Liquidation means exactly what it says. After listing all of your assets and debts, all unprotected property is used by the trustee to satisfy your creditors to the maximum extent possible. Under reorganization, your property, your assets, remains in your possession, your debts are “restructured” and you make regular monthly payments to the trustee to pay back a portion or all of your debt over time.
