The terms “Chapter 7” and “Chapter 13” come from the Bankruptcy Code, which is intended to provide financial relief to individuals who have become consumed by debt. The difference between the two concerns the status of the bankrupt individual’s debts following a successful litigation. With a Chapter 7 bankruptcy filing, also known as “straight bankruptcy,” most types of unsecured debt are eliminated, including medical bills, credit card balances and personal loans. With a Chapter 13 bankruptcy filing, your unsecured debts are consolidated, and you have option of paying them back without accruing additional interest.
There are several reasons why people decide to file for Chapter 7 bankruptcy. If you do not have a great deal of property and find that you are having trouble affording necessities, such as food and clothes, you should ask your bankruptcy attorney if Chapter 7 could work for you. Chapter 7 bankruptcy litigation is usually a much faster and more streamlined process than that associated with Chapter 13. When you file for Chapter 7 bankruptcy, it usually takes only three to six months to complete. Once the process is completed, you’re free of debt (except for house payments, car payments, student loans, new taxes and child support balances). Most people also get to keep their property under a Chapter 7 filing, though you should discuss your particular situation with your bankruptcy attorney.
Filing for Chapter 7 bankruptcy relief requires that you turn over all nonexempt property to a trustee. The trustee will then sell the property and use the proceeds to pay your creditors. Once the court filing fees are paid, a bankruptcy judge will discharge your debts — assuming, of course, that you’re eligible. Eligibility depends on a number of factors, including whether or not you have:
Whether you are considering filing for bankruptcy or trying to decide between Chapter 7 and Chapter 13, it’s worth it to speak with a qualified bankruptcy attorney as soon as possible to assess your situation. Get in touch with Thomas D. Berry Attorney At Law today to get started.