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Chapter 7 And 13 Bankruptcy Considerations

Posted on January 4th, 2022

Bankruptcy Lawyer

If you are struggling with debt and that struggle is starting to become overwhelming, it may be worth your time to explore whether filing for bankruptcy could help you to achieve a fresh start. Filing for bankruptcy is not the best solution for every debt-related circumstance. However, this process does help millions of Americans each year escape the weight of crushing debt.

There are many myths and misconceptions that color discussions about bankruptcy in American culture. Therefore, it is vitally important that you speak with an experienced attorney and/or experienced nonprofit credit counselor about your concerns before you form a plan of action either way. All too often, individuals who could benefit significantly from filing for bankruptcy resist this process because of misinformation. Understanding how bankruptcy works and what the process can do for you will help you to make informed decisions about your financial situation.

Chapter 7 Bankruptcy

As an experienced bankruptcy lawyer – including those who practice at Pioletti Pioletti & Nichols – can explain in greater detail, not everyone is eligible to file for Chapter 7 bankruptcy relief. This chapter of the U.S. Bankruptcy Code only applies to individuals who make very little income. If you qualify for Chapter 7 bankruptcy relief, your eligible debts can be discharged (wiped clean) after a few months. Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy does not require filers to pay back their creditors for a time before their debts can be discharged. Debts eligible for discharge include credit card bills, many medical bills, and other qualifying “unsecured” debts. Secured debts—such as auto loans and mortgages—are not eligible for discharge.

If you ever hear of Chapter 7 bankruptcy referred to as “liquidation bankruptcy,” don’t panic. While it is true that Chapter 7 cases are overseen by trustees empowered to sell a filer’s unexempt property, it is very, very rare that individuals eligible for Chapter 7 bankruptcy relief possess the kind of luxury property that is generally considered to be unexempt. Most of the time, filers only have property that can be exempted from risk of sale for the benefit of creditors. If you are unsure of whether your property is exempt or unexempt, an attorney can clarify that for you.

Chapter 13 Bankruptcy

Most individuals, regardless of how much income they make, are eligible to file for Chapter 13 bankruptcy. This process involves creating a repayment plan that will last from 3-5 years. Payments are constructed so that they are manageable for the filer. At the end of a successful 3-5 year repayment plan, any remaining eligible debts on a filer’s account are discharged (wiped clean).



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