What’s the Difference Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy?
If you are looking to file for bankruptcy, you may wonder what’s the difference between chapter 7 and chapter 13. These two types of bankruptcy have very different goals, requirements, and outcomes. Let’s take a closer look.
Difference Between Chapter 13 and Chapter 7
If you are considering bankruptcy, you may be wondering what the difference between Chapter 7 and Chapter 13 is. These two bankruptcy laws have different purposes, and you need to understand which one suits you best.One of the main differences between these two is how much you can keep. In the case of a chapter 7, your property and assets can be liquidated and sold in order to pay off your creditors. On the other hand, a chapter 13 will let you retain any assets you own, while allowing you to catch up on secured debt and reorganize your finances.
Chapter 13 is an alternative to a chapter 7, and a repayment plan is a big part of the process. A repayment plan entails making a series of payments to your creditors over a period of three to five years. It is generally considered to be a more cost-effective and streamlined way to repay your debts.There are many benefits to filing a chapter 13, including protection from collection actions, reduction of ongoing interest, and a streamlined process. Another benefit is that you can keep your home and collateral if you have a mortgage. You can also keep your car.
Chapter 7 and Chapter 13 Have Different Goals
When it comes to bankruptcy, the two most common are Chapter 7 and Chapter 13. Both are used to discharge debt. However, the benefits of each are different. For instance, in a Chapter 13, you can retain some of your assets while paying your debt. On the other hand, in a Chapter 7, your property is liquidated in exchange for the release of some of your unsecured debt.
If you’re unsure about which type of bankruptcy is right for you, consult a bankruptcy attorney. It’s important to understand the benefits of each before making a decision.For instance, in a Chapter 7, you can stop a foreclosure by giving your mortgage company time to bring your home up to date. This is a great solution if you’ve fallen behind on your mortgage payments. Also, you can get a fresh start and erase some of your taxes.Aside from the fact that it erases most consumer debts, a Chapter 7 is also fast. You can complete the process in about three to five months. During the process, your creditors will not be able to contact you.
Chapter 7 and Chapter 13 Produce Different Outcomes
If you are thinking about filing for bankruptcy, you may be wondering if Chapter 7 or Chapter 13 will give you the best outcomes. Both are effective at discharging your debts, but there are differences between the two. You should consult a lawyer before you file to ensure that you have the right chapter for your situation.
When filing for bankruptcy, you will need to complete a credit counseling course. The court will look at your income and expenses to determine whether you qualify for Chapter 7.For Chapter 7, you will have to prove that you cannot pay your debts. This is known as the “Means Test.” Your income and expenses will need to fall below the median income for your state. It is also important to be prepared to pay the attorney fees associated with your case.
On the other hand, with Chapter 13, you will need to submit a repayment plan to the court. A repayment plan is designed to allow you to catch up on your debts over three to five years. In addition, your creditors will need to accept the plan. Once the plan is approved, your unsecured debts are discharged.
Chapter 7 Can Clear Unsecured Debts At A Faster Pace
Chapter 7 is a form of bankruptcy that can clear unsecured debts faster than others. But there are a few things to keep in mind. Besides, there’s more to a Chapter 7 filing than just filling out forms and paying fees.It’s worth noting that a Chapter 7 filing will not prevent secured creditors from taking property. However, it will stop most collection actions.
For example, you won’t have to deal with wage garnishments. Your credit card companies may argue that recent charges can’t be cleared. And they might not try to contact you by phone.
Some secured debts don’t require repayment, including some types of loans, such as car loans. You can still keep the vehicle you bought with the loan.Similarly, a Chapter 7 filing can’t help you keep your home, but it can eliminate unsecured obligations, such as medical bills. When you file for bankruptcy, the court will look at your income and living expenses to determine whether you qualify.The good news is that most people can discharge their unsecured debts in six months or less. This includes medical bills, personal loans, utility payments, credit cards, and other debts.
a Repayment Plan Is Required With Chapter 13
The Chapter 13 Repayment Plan is a powerful tool for helping you make up mortgage payments. But it’s not a one-size-fits-all solution. In order to successfully complete the plan, you’ll need to be able to show the judge that you’re not going to lose your home.
A well-crafted Chapter 13 plan will not only help you catch up on mortgage and car payments, it will also put you in a position to avoid foreclosure in the future. However, it can take up to five years to complete. And, in the midst of a bankruptcy, you won’t have direct contact with your creditors.
You’ll need to put together a repayment plan detailing your debts, income, and expenses. This includes a detailed explanation of the amount you’ll pay your creditors.Your plan should last at least five years, though many courts allow you to extend this period. The court will review your plan and approve it. If your income isn’t enough to cover your plan’s expenses, you’ll need to modify it.Taking the time to write a comprehensive plan may be worth the effort. The best Chapter 13 plans are crafted with input from a lawyer.
The Definition Of Dischargeable and Non-Dischargeable Debt
When filing for bankruptcy, you have the option to file for a discharge of certain debts. However, there are some types of debts that can not be discharged. These non-dischargeable debts may be due to the actions of the debtor or the nature of the debt.One of the most common kinds of non-dischargeable debts is the debt incurred by a fraudulent act. This would include a fraudulent credit card transaction. The creditor has to prove that the debt was incurred on a false pretense. Other types of intentional wrongdoing debts include criminal actions, misrepresentations, and torts.
The Bankruptcy Code provides a short list of exceptions to non-dischargeable debts. These exceptions are designed to help prevent fraudulent activities. Among these are debts based on larceny, debts based on fraudulent acts, and debts resulting from a marital settlement. There are also other United States Code exemptions that overlap with the Bankruptcy Code’s non-dischargeable debts.Another exception to non-dischargeable debts is those owed to certain tax-advantaged retirement plans. In such cases, the debt is not discharged even if you have paid the taxes.
Eligibility Requirements Between Chapter 7 and 13
Chapter 7 bankruptcy and chapter 13 bankruptcy are both effective ways of getting out of debt, but they are also different. Both have their own eligibility requirements. If you’re unsure which one to file, it’s best to consult an attorney. They can help you evaluate your situation, determine your options, and determine which option is best for you.
Chapter 7 is usually faster and cheaper. It can give you the opportunity to discharge most of your debt upfront. However, you may not be able to get your secured loan balances back.On the other hand, Chapter 13 gives you more control over your debt and helps you keep your property. However, it’s a longer process and can be challenging. You’ll need to file for a court-approved repayment plan, and creditors will have the right to object to it.When you decide to file for bankruptcy, you’ll have to determine whether you can afford to pay your debts. This is called the “means test”. The results will determine whether your household income is enough to support the cost of your debts.
chapter 7 and 13 Bankruptcy Procedures by state
Here is the list of states:
- Chapter 7 Bankruptcy In Indiana
- Chapter 7 Bankruptcy In CT
- Chapter 7 Bankruptcy In Virginia
- Chapter 7 Bankruptcy In Pennsylvania
- Chapter 7 Bankruptcy In Colorado
- Chapter 7 Bankruptcy In Wisconsin
- Chapter 7 Bankruptcy In NY
How A Bankruptcy Attorney Can Help You File
Whether you are considering filing for bankruptcy or are already in the process, it is important to hire an attorney to represent you. A good bankruptcy attorney can help you navigate the complicated rules and laws that accompany the process.To start, you will need to prepare your finances, as well as gather and file paperwork with the court. You may be able to do this without an attorney, but you will likely benefit more from an experienced one.
One of the best ways to protect your assets is to file for bankruptcy. The filing of a bankruptcy petition triggers a stay, which will stop your creditors from contacting you.The filing of a bankruptcy petition is also the first step in creating a payment plan. This plan is used as the basis for negotiations with your creditors.
Depending on your needs, you may qualify for free or low-cost legal assistance. Check with your local Legal Aid Society or state bar to find out if you are eligible.Fortunately, there are many tools available online that can guide you through the bankruptcy process. If you are unable to pay for an attorney, there are still options for bankruptcy filing. Now that you know what’s the difference between chapter 7 bankruptcy and chapter 13 call us for assistance.