Chapter 13
Chapter 13 is a type of bankruptcy that works much like a debt consolidation plan.
Chapter 13 debtors have a source of income and are able to fund a payment plan through the Bankruptcy Court. The payment plan typically lasts between 36 and 60 months.
The Chapter 13 payment is made to the Trustee each month. That payment will cover the Debtor's obligation to the majority of his or her creditors. Automobile debt, tax debt, credit cards and medical bills are examples of the types of debt that are covered by the Chapter 13 payment, and Chapter 13 works best for individuals who have those types of liabilities.
Chapter 13 will also help those who are behind on mortgage payments, as the amount that is delinquent at the time of filing can be paid through the Chapter 13 plan.
Once the Chapter 13 case is filed the automatic stay goes into effect, protecting the Debtor and his assets from all creditors. Chapter 13 brings immediate protection to those facing foreclosure, repossession, wage garnishment, or levy.
Chapter 13 attorney's fees are set by the Court, and the fee is typically paid through the Chapter 13 plan. Consequently, in most situations the case can be filed with little or no money up front.
Once the case is complete, the Court enters an Order of discharge. That Order prohibits all creditors whose claims were discharged from ever collecting on these debts.
|
Chapter 7
Filing for relief under Chapter 7 will discharge or eliminate dischargeable unsecured debts.
A Chapter 7 debtor must show an inability to repay his creditors.
If you have a home, car or bank account that is worth more than what is owed, the Chapter 7 Trustee can sell or liquidate it to generate money for the creditors in the case. The Bankruptcy law does allow the Chapter 7 debtor to "exempt", or protect, a certain amount of equity in real property and personal property. Each case is different, and it is important to have an experienced bankruptcy attorney if you are thinking about Chapter 7.
Not all debts are dischargeable in Chapter 7 bankruptcy. Child support debts, certain tax debts and fraud-related debts are among the debts that can not be discharged in Chapter 7. There are many other debts that fall into this category.
Chapter 7 attorney's fees vary from case to case, depending on how complicated the situation is. The attorney's fee and the filing fee are paid up front prior to filing the bankruptcy case.
Once the case is complete, the Court enters an Order of discharge. That Order prohibits all creditors whose claims were discharged from ever collecting on these debts.
|
