Find Out If Chapter 7 or Chapter 13 Bankruptcy Is Right for You
The term bankruptcy refers to the process of liquidating assets to pay off debts. It is a step taken by debtors to create a repayment plan to get out of the vicious circle of debt. The process of filing a petition can be initiated by individuals or jointly by a group. This blog post presents to you some pros and cons of Chapter 7 and Chapter 13 of the bankruptcy code so that you can make a sensible call according to your situation.
Chapter 7 Bankruptcy
This chapter of bankruptcy is commonly known as liquidation, in which the trustee takes over the assets of a debtor under the court’s supervision and reduces the assets to recover the debt. The trustee, who distributes the money among creditors, needs to follow certain exemptions and rights pertaining to them. This means Chapter 7 of the bankruptcy code allows no nonexempt property, and this can affect the distribution of assets among unsecured creditors.
Most of the debtors who file for bankruptcy individually will receive a discharge releasing them from personal liability for dischargeable debts according to the provision under this chapter. Filing for bankruptcy under Chapter 7 is beneficial, but a debtor needs to pass a means test before receiving the benefits. The means test takes place to verify whether the debtor is eligible for filing for bankruptcy or not.
Certain debtors who have no fixed source of income and are unable to repay the debt in three to five years choose to file for bankruptcy under Chapter 7. This chapter of the bankruptcy code is helpful, as it takes less time and offers immediate relief from debts. Additionally, most of the dischargeable debts, like credit card bills and medical bills, are covered under Chapter 7. Hence, filing for bankruptcy under Chapter 7 scores over other chapters of the code.
Chapter 13 Bankruptcy
Chapter 13 is suitable for debtors who have a fixed source of income. Under this chapter, the debtor should chalk out a plan to repay the total amount over a fixed period. The bankruptcy court will approve the repayment plan and the debtor will pay off the previous debts with procured funds. Chapter 13 allows a debtor to retain his or her home, unlike Chapter 7, which in turn gives the debtor an immediate discharge of debts.
The Chapter 13 regulations allow the reorganizing of debts with affordable repayment plans. Student loans and several tax obligations can be easily reorganized for repayment. This chapter doesn’t include forfeiture of property and lets the debtor pay the amount out of his or her income. Moreover, the co-debtors are also saved from the clutches of creditors if the debtor stays current on the repayment plan. To save your property and co-debtors from falling prey to debt, you should go for Chapter 13 and prepare your repayment plan to get rid of the debt.
As you know, filing for bankruptcy is a difficult thing to do, yet it is the last option you would go for to get relief from your debt. The decision to choose between Chapter 7 and Chapter 13 bankruptcy is pretty important to get the desired results. For this, you must consult a good bankruptcy lawyer in OKC who can guide you throughout the process. A confident bankruptcy attorney can help you get out of troubled waters in the best possible way so that you can start your life anew.