Know your 7 & 13
The typical bankruptcies are 7,11 and 13. The two consumer bankruptcies are usually Chapter 7 and Chapter 13. Chapter 11 is normally used for business reorganization or for those individuals who have over $1,000,000 of secured debt and/or over $336,000 of general unexecuted debt.
Chapter 7 is a quick process which is usually discharged in about 3 months from the filing date. There is no minimum requirement for the amount of debt that can be discharged in a Chapter 7. Chapter 7 can wipe out most debts and will not harm your credit. In almost all cases you can keep your house, cars and personal items. Child support, alimony, student loans, criminal restitution and certain IRS debts are not dischargeable. But certain IRS debts are dischargeable. Credit cards, medical bills, personal loans, payday loans, car repossessions, time shares, gym memberships, and most other unsecured debts are dischargeable in a Chapter 7. You can file a Chapter 7 and go on to purchase a home within about 6 months to 2 years after discharge, or a car immediately after discharge. If you desire, you can also obtain new credit cards. Individuals, married couples and businesses may all qualify for a Chapter 7. There is a means test which is not actually a test, but a maximum amount of income per household that determines whether you qualify for a Chapter 7. The means test is quite liberal and allows most people to qualify for Chapter 7! There are other factors that determine whether one qualifies for a Chapter 7 and since every individual case is different, please feel free to call us today to see if you qualify for a Chapter 7 and to get a quote for our low flat fees.
Chapter 13 can help if you have fallen behind on your mortgage, car, rent, taxes, insurance surcharges or child support. Chapter 13 provides a repayment plan that spans over a 3 to 5 year repayment period referred to as a “Chapter 13 plan”. In most cases you can still get rid of most or all of your unsecured debts. This depends on your income and the amount of equity in your home. If you have over a certain amount of income or equity in your home, then your plan may include a repayment of a portion or, rarely, all of your unsecured debt. Since every individual has a different situation, you should call us for more information about Chapter 13.
Through Chapter 13, clients stop the foreclosure of their home, catch up on child support arrears, rent arrears, tax arrears, and get their driver’s licenses restored. Payments begin the month after the case is filed and plan payments go directly to the trustee, who is appointed by the Bankruptcy Court. These payments are eventually disbursed to those who are to receive funds through your Chapter 13 plan.
Chapter 13 also helps those Debtors that are over the means test. Those with too much income to qualify for a Chapter 7 usually do qualify for a low Chapter 13 repayment plan of a small portion of their debts. These repayment plans range from 3 to 5 years. The remainder of the debts are simply discharged when the plan is complete and the case is discharged. Again, since each individual’s income, assets and circumstances vary, you will need to contact us to discuss your options.
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