You may have heard of Chapter 7 bankruptcy and Chapter 13. If you’re considering filing for bankruptcy you might be curious which one you prefer. Chapters: Chapter 7 bankruptcy, also known as liquidation bankruptcy, and Chapter 13 bankruptcy, is sometimes referred to simply as the wage earner’s plan or reorganization bankruptcy. Talk to a chapter 13 bankruptcy lawyer chicago il for more information.
Qualifying- Because certain laws restrict access to Chapter 7 bankruptcy for certain consumers, and require certain factors to be met by those filing under Chapter 13, it is possible that you may not always have the option of choosing which Chapter you can file. You must meet the qualifying criteria. It is crucial to know this, because you cannot simply select a Chapter and then launch into the process.
Chapter 7- Chapter 7 bankruptcy helps debtors with the most urgent debt problems. This is usually reserved for those who have very little or no assets and cannot afford to make monthly payments towards pre-existing debts. To be eligible for Chapter 7, filers must pass the means test, which compares their monthly income with the state’s median income. Chapter 7 is generally available to those whose average monthly income falls below or equals the state’s median income. You will need to calculate if your income is sufficient to pay the monthly payments if it exceeds the state median. You won’t be able choose Chapter 7 if your disposable income exceeds the state median.
Chapter 13- Chapter 13 bankruptcy – This plan is for wage earners. It reorganizes debt, and allows filers make consolidated monthly payments towards them over three to five year periods. Filers must have sufficient income and funds to pay the reorganization fees. A Chapter 13 bankruptcy does not mean that you won’t receive a discharge. However, this happens at the conclusion of a plan. Filers can also keep certain properties by paying off all or a portion of the pre-existing debt.
The criteria you meet, your financial situation and your goals for the future will all influence your choice of Chapter of bankruptcy. It can be difficult to understand the unique benefits and how they will affect you. This is why it is important to consult an experienced chapter 7 bankruptcy attorney indianapolis in.
This post was written by Trey Wright, a bankruptcy lawyer in Jacksonville FL with extensive experience! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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