Chapter 7 bankruptcy and Chapter 13 personal bankruptcy offer you various varieties of protection. If you're going through a financial crisis, a neighborhood personal bankruptcy attorney can help you determine whether Chapter 7 bankruptcy or Chapter 13 personal bankruptcy might be the correct answer for you.
Usually speaking, Chapter 7 bankruptcy is intended to wipe the slate clear by discharging unsecured consumer debt-debts like store credit, credit card debt, medical charges, and unsecured homeowner loans. Chapter 13 bankruptcy, on the other hand, is meant to give a consumer time to catch up past due installments over a period of 3-5 years, while keeping guaranteed possessions like homes and vehicles.
What is Personal bankruptcy?
There are two kinds of consumer personal bankruptcy. Both are supposed to help consumers in monetary crisis, but the solutions given are very distinct.
Chapter 7 personal bankruptcy, or liquidation, is far more prevalent. Chapter 7 bankruptcy was intended to eradicate a lot of unsecured consumer debt (credit cards, medical bills, old energy bills, unsecured personal loans, and so on), and can commonly be finished inside of only a few months. In a Chapter 7 bankruptcy case, the trustee can liquidate (sell) non-exempt property to pay creditors, but many people who file for Chapter 7 personal bankruptcy don't possess any non-exempt property, and so are able to preserve their possessions while eliminating unsecured bad debts.
Chapter 13 bankruptcy is generally the answer of choice for people who have a number of guaranteed personal debt, such as car homeowner loans and mortgages, and wish to preserve the property that serves as security for the financial loans. In a Chapter 13 case, the consumer enters into a payment strategy that enables 3-5 years to catch up on over due repayments.
Given that the bankruptcy law modification in 2005, there have been a lot of misunderstandings about chapter 7. For instance, many people have been led to think that nearly no one can file for Chapter 7 anymore. That's basically not true. Though the new chapter 7 law that took effect in October, 2005 added some hoops for borrowers to jump through, personal bankruptcy attorneys and credit counseling businesses have discovered from the beginning that the Chapter 7 means check actually prevents very few borrowers from applying under Chapter 7. In reality, some credit counseling agencies have said that by the time a lot of debtors get to them for the newly-required pre-filing credit counseling, they have no other reasonable option! The safety net of personal bankruptcy is still offered to a lot of folks in financial crisis.
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