If you're struggling to change your financial life, the first step is understanding the options. Learn how the personal bankruptcy protections in the U.S. Bankruptcy Code have helped people across the United States with credit card debt, pending home foreclosure or other urgent financial matters.
The U.S. Bankruptcy Code offers two different personal bankruptcy protections: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 bankruptcy works to excuse, or discharge, unsecured debts. Unsecured debts may include credit card debt, medical bills, payday loans or other debts that are not tied to a specific item, like a home, car or boat.
Personal Options When Filing Bankruptcy
Chapter 7 bankruptcy, the most common form of personal bankruptcy, works through a "liquidation", or sale, of the debtor's non-exempt assets—but many Chapter 7 debtors find that all of their property is exempt and there is no liquidation.
On the other hand, Chapter 13 bankruptcy may help stop foreclosure or repossession through a 3-5 year repayment plan. The payment plan allows the breathing room to catch up secured debts over time while keeping most property.
Choosing Chapter 7 or Chapter 13 bankruptcy may depend on a number of issues, including the types of debt you have, assets you have, your income level, and whether or not you have any cosigners on your debt.
Generally speaking, people who choose Chapter 7 bankruptcy may not own much property beyond basic necessities like clothing and furniture, and are burdened by credit card bills, uninsured medical expenses, and other unsecured debt.
For people who are struggling to make minimum monthly payments and watching fees and interest mount, Chapter 7 bankruptcy is often an effective way to break that cycle and regain control.
The Chapter 7 means test was designed to ensure that only people who truly lacked the means to pay their debts qualified for Chapter 7 bankruptcy.
On the other hand, Chapter 13 bankruptcy personal bankruptcy protection is often the remedy of choice for those whose debts are primarily secured, such as automobile loans and home mortgages.
Chapter 13 bankruptcy is a reorganization of debts in the form of a 3-5 year repayment plan. Therefore, anyone filing for Chapter 13 bankruptcy must have a regular income from which to make payments.
In Chapter 13 bankruptcy, you will continue to pay a portion of what you owe on your debts. However, you will typically make one monthly payment to a bankruptcy trustee, who will distribute the payment to your creditors.
Examine Personal Bankruptcy with a Local Bankruptcy Lawyer
Financial difficulties can be a source of overwhelming stress, as you and your family may already have discovered. Millions of Americans have chosen bankruptcy as a means of ending that stress and starting anew. If you're feeling that stress, take the time to talk with a local bankruptcy lawyer and learn about your options.
You've already taken an empowering step toward learning more about the possible solutions to your financial problems, including Chapter 7 and Chapter 13 personal bankruptcy. Now you can get in touch with a local bankruptcy lawyer who can provide even more clarity as to how the different personal bankruptcy options may work for you.
Simply fill out our free bankruptcy evaluation form or call 877-833-2410, and we'll quickly connect you with a bankruptcy attorney in your area who can answer your questions and help you determine the best next steps for your family.