Are You Eligible for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?
Due to the complexity of bankruptcy law, there is a great deal of confusion surrounding the process. Many people understand that several different types of bankruptcy exist, but they are not sure how they play out in practice. Those who consider filing bankruptcy are best served by understanding the differences between the most frequent types of bankruptcy: Chapter 13 bankruptcy and Chapter 7 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often called a “liquidation” or “clean slate” bankruptcy, ends with the liquidation of nonexempt assets and the distribution of proceeds to priority creditors. The filer does not lose all possessions, and some things are exempt from liquidation, including certain types of home equity, a vehicle, certain savings and certain household property. Many of those who go through a Chapter 7 bankruptcy proceeding have assets that fall under exemptions, so they pay their creditors nothing.
After the payment of creditors, a discharge order is issued by the court and the filer is no longer liable for debts specified in the petition. As such, creditors cannot collect on debts and accounts display a zero balance on a credit report.
To qualify for debt relief in Chapter 7 bankruptcy, a person must pass a “means test,” based on the median income in the given state with numerous deductions depending on the facts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is referred to as a “wage earner’s” bankruptcy due to the fact that those who undertake this filing need assistance for the reorganization of their financial situation. Chapter 13 bankruptcy filers undertake repayment plans that last three to five years and are able to keep more possessions than in Chapter 7 bankruptcy as they repay more creditors.
Asking What Happens After Filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy? Contact An Attorney.
We are prepared to put the experience we have earned in thousands of cases to help you ideally address the financial challenges with which you are faced if you are considering bankruptcy. We will do everything to assist you in finding the right solution for your unique needs, circumstances and goals.
To schedule a free initial consultation with our Monmouth County, New Jersey, Chapter 7 bankruptcy lawyer, call local: 732-988-1500 or fill out our contact form.