Sometimes situations arise when you can no longer pay your bills. Although you may have the best intentions of paying off your debt, you simply may not have the means to make this happen. When you can no longer pay your bills, you may need to consider filing bankruptcy for debt resolution. Hopefully, you will have considered your alternatives, but sometimes bankruptcy is the most viable option.
You’ll find both the chapter 7 and chapter 13 in the US bankruptcy code and they both deals with individuals. There are significant differences between the two, and if you plan on filing your petition, meaning without the help of a bankruptcy attorney, then you need to be aware of these differences and make sure you prepare your bankruptcy petition accordingly, though it is not recommended that you go it alone, it’s just too easy to make mistakes and get denied.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy means that every non-exempt asset you own will be liquidated to pay your creditors. It is likely that much of the property you own is considered exempt and, therefore, not subject to liquidation. A skilled bankruptcy attorney can take a look at your case and let you know what you would be able to keep should you file for Chapter 7 bankruptcy. If you choose to file for bankruptcy under Chapter 7, you will be required to take a “means test” to ensure your income is not higher than a certain amount. Should your income exceed that certain amount, you will not be considered eligible to file for Chapter 7 relief?
What is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy can be called “payment plan” bankruptcy. A debtor makes monthly payments to the bankruptcy trustee over the course of 3 – 5 years. Once all payments have been completed, most debts are discharged. How much does a debtor have to pay each month? In a nutshell, a debtor’s monthly payment will be the debtor’s monthly take-home pay minus the debtor’s “reasonable monthly expenses.” A competent bankruptcy attorney will be able to assess your income and expenses and help estimate what your monthly payment will be.
What are the Differences between Chapter 7 and Chapter 13 Bankruptcy?
Individuals can file both forms, and they will both have a negative impact on future ability to obtain credit; however, there are some fundamental differences to be aware. The main differences are the control of property and assets and the length of time for court involvement. Under Chapter 7 Bankruptcy, individuals give up their rights to excess property and assets and can get out of bankruptcy quickly. In a Chapter 13 filing, the individual will get to keep control of his or her property, but be under court supervision for a more extended period.
Both the chapter 7 and chapter 13 come with pros and cons. So, before you commit to either one, you should sit down with a bankruptcy attorney and go over your obligations and options completely. Weighing out the pros and cons of both types and basing your decision on your current situation, you will be able to decide which route you should go with smoothly.
Bohikian Law Group specializes in chapter 7 and chapter 13 bankruptcies in Michigan. Contact us today to find a bankruptcy attorney that will help you in debt relief at http://www.bohikianlaw.com/ today.