Depending on how much money you make, you’ll either be qualified to have your debt wiped out in Chapter 7, or enter into a repayment plan in chapter 13. Both chapter 7 and chapter 13 will offer you solutions to get back on your financial front. Apart from having some similarities between both the chapters like state exemption allowing you to keep a certain amount of property, there are a lot of differences between the two chapters.
Chapter 7 works if you don’t make a lot of money at the end of the month, or if you see that you have nothing left to pay your bills. In Chapter 7, there is nothing that you have to pay back to your creditors. However, in chapter 13, you have to make monthly payments to your creditors within a term of either 3 years or 5 years.
Chapter 7 Bankruptcy
People want to file for Chapter 7 Bankruptcy because it is quick and it does not require a repayment plan. You need to qualify to be able to apply for chapter 7 bankruptcy. You also get to keep most of your property through the property exemption. The bankruptcy trustee, who is assigned and has to make sure that all your creditors are re-paid properly, can sell any non-exempt property and distribute its amount to your creditors. If everything goes right and happens properly, your case will take about 4 months to get completed. Once the bankrupts are over, your dischargeable gets wiped out completely. Even the most people want to file for chapter 7 bankruptcy, not everyone qualifies for the same. Most importantly, you need to be sure that you need file for bankruptcy. Consulting a good attorney who can help you with deciding whether Chapter 7 is a better option for you or chapter 13 is the first step you need to take. You can also contact Recovery Law Group from Los Angeles & Dallas, TX for the Same. Contact – (888-297-6203).
Chapter 13 Bankruptcy
After paying your household expenses, if you have disposable income left, you cannot file for chapter 7 bankruptcy. You need chapter 13 Bankruptcy. And those extra incomes are the amount that you pay the creditors over a 3 to 5-year repayment plan. Unlike chapter 7 where your property can be sold and repaid to the creditors, here you cannot do that. You pay the equivalent value of your non-exempt property to the creditors. The higher your monthly payment will be the more property you have. After completion of your repayment plan, the outstanding balances on your non-priority unsecured debts are discharged.
In the end, the first thing you need to decide on before filing for bankruptcy is how you plan to repay your debts. Once you are able to settle that, only then is applying for bankruptcy a viable option. You need to remember, your properties can be discharged if you take the wrong step.