Chapter 7 and Chapter 13 cases are the most common type of bankruptcies filed in the United States. When it comes to determining what bankruptcy case to file, you have to consider your income, asset, debt, and financial goals. What does Chapter 7 bankruptcy mean? Chapter 7 refers to the liquidation bankruptcy which aims to eliminate all general unsecured debts such as medical bills and credit cards. However, for those who make too much money may file a Chapter 13 bankruptcy instead of Chapter 7. Generally, the Chapter 7 bankruptcy is recommended for low-income debtors since they have little or no asset to liquidate in paying their unsecured debts.
Once a person filed for a Chapter 7 bankruptcy, a trustee is appointed to review the bankruptcy documents and sells the debtor’s nonexempt properties to pay the creditors, and if there are no assets to sell, the creditors receive nothing. Chapter 13 bankruptcy recognizes that there are types of debtors who can pay a portion of their debts with the help of a repayment plan. The debtor gets to keep all his properties including those assets that are nonexempt. The amount a debtor needs to pay under the Chapter 13 bankruptcy is based on the income, other debts, and expenses. Chapter 13 bankruptcy is highly recommended for those who want to catch up on missed car payments or mortgage loans, or in paying off non-dischargeable debts such as arrears in child support or alimony. While there are simple cases of Chapter 7 bankruptcy, you may need to hire a bankruptcy lawyer for complex cases involves preparation of a large set of forms and navigation of overwhelming and confusing legal matters.
If you are an unemployed debtor without a residential property or your own home, no car, and no asset at all, the most effective and fastest way to get rid of your debt is through Chapter 7 bankruptcy. That is why Chapter 7 bankruptcy is also known as “no asset” bankruptcy. If an unemployed homeowner has a home but the value is less than the amount of the lien, the debtor has no equity in the bankruptcy estate, thus the house is protected from liquidation, and filing a Chapter 7 can help the debtor seek relief from all of his unsecured debts. Learn more about the Chapter 7 and Chapter 13 bankruptcy by visiting our homepage or website now. When it comes to filing a bankruptcy case, it is always nice to know that you have legal options available, and if you are in doubt, you can always seek the help and expertise of a bankruptcy lawyer.