bankruptcy typesMost of the people know that the best way to get rid of debt is taking the help of bankruptcy lawyers and filing bankruptcy. They want to get rid of personal debts leading to personal bankruptcy that includes credit card bankruptcy and medical bills bankruptcy.
The following write up serves just as an eye opener for those who do not know the difference between the Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy:
This is also called liquidation. When one files for Chapter 7 Bankruptcy, one requests the bankruptcy court to appoint a trustee to liquidate the assets that are not exempted from being attached. Some of the assets that are exempted from being attached are equity in the home, job tools, retirement plans, insurance, public benefits (like social security, welfare and unemployment insurance) and some personal property. This is like bringing an immediate end to the debt by whatever resources those are available. There is a high risk of losing property when filing for Chapter 7. The applicant‘s income should not be more than the median income of a family of the same size in the state.
Want to bring immediate end to all the debt and file for Chapter 7 Bankruptcy?
Chapter 13 Bankruptcy:
This is also called reorganization. Filing Chapter 13 Bankruptcy is proposing the bankruptcy court about the debtors plan to pay off the debts over an extended duration of three to five years. Some of the debts have to be paid fully while there are some that can be paid partially. This depends on the way the case is presented for the bankruptcy court. This is like bringing a slow end to the debt over a certain period of time. Filing for Chapter 13 Bankruptcy causes no danger of losing the property. For filing Chapter 13 Bankruptcy the secured debts should be less than $1,010,650 and the unsecured debts should be less than $336,900.
Want to bring a gradual end to all the debt and file for Chapter 13 Bankruptcy?
In a nut shell filing for chapter 7 bankruptcy means bringing sudden end to all the debts at the risk of losing even the property but filing for chapter 13 bankruptcy means you are planning to repay the debts over a prolonged duration of 3-5 years. It depends on the debtor‘s mentality and financial status especially the source of income and expenses.
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