Bankruptcy is a process in which individuals and businesses try to eliminate their debt or have some protection while repaying the creditors. When it comes to filing for bankruptcy in the United States, most individual debtors get confused in choosing between Chapter 7 and Chapter 13 of bankruptcy. Both these chapters have their own pros and cons and it can be quite a task to choose the right Chapter. Here, we shall analyze the pros and cons of these chapters, which shall help you make the right choice.
Chapter 7 is ideal for you when you have little property except for the basic necessities like, furniture and clothing or you have little money after paying your basic monthly expanses. Under this chapter, a court appointed trustee oversees the liquidation of all your assets and repays to your creditors charging you a small commission for overseeing the bankruptcy process. The biggest advantage of this Chapter is that all your debts can be discharged and the entire process takes only a few months.
Here, once you file for bankruptcy, the courts automatically grant you a stay which protects you from creditors, their phone calls and collection agents. Most individual debtors prefer to file for bankruptcy under this Chapter. You can also get certain assets, such as your home and vehicle are exempted from the liquidation process. To qualify for this chapter, you shall have to pass the 'means test' and complete a required pre-filing session with a credit counselor. However, this chapter doesn't apply to debts such as alimony, child support, fraudulent debts, and student loans.
For individuals, who have significant equity at home or other property and want to keep it, Chapter 13 is the way to go while filing for bankruptcy. If you have a regular income and have failed to pay your creditors on time and need to make a fresh start, this is the Chapter for you. It is often known as 'debt adjustment' chapter at it allows you to keep possession of your assets and work out on a new plan to pay back to the creditors. To qualify for this chapter, your unsecured debt should be below $360,475 and secured debts should be below$1,081,400.
This chapter can stop foreclosure of homes and repossession of things like cars purchased with loans, which makes it ideal for people who have regular flow of income. One of the major downsides of this debt adjustment program is the fact that it can last for 3 to 5 years.
You need to keep one thing in mind that all bankruptcy cases are unique and need to be approached in a methodical manner. Thus, it is advisable that you get in touch with a bankruptcy attorney who has experience in this field, as not only will the attorney guide you in choosing the right chapter in filing for bankruptcy but will ensure that the repayment process is favorable to your condition.
Attorneyforbankruptcy.com is a leading law firm of California where you can hire most experienced san jose chapter 7 bankruptcy lawyer and tax attorney san jose.
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