Chapter 7 Or 13 Bankruptcy – Which Is Pertinent To Your Case Of Financial Crisis?
Many have thought of declaring bankruptcy as the solution to debt problems. This to them is the path to a clean financial slate. Although this may give a distressed business a debt relief, it may not be applicable to everyone and every situation.
There are two types of bankruptcy cases – that which is covered by Chapter 7 and the other is under Chapter 13. The bankruptcy law has many complexities and you cannot just file any of these two. You have to know the conditions that will qualify you. Your might not even be eligible to any of these two.
Chapter 7 is commonly known as the personal bankruptcy. What will this do? This will eliminate your personal and unsecured debts and will thus give you a fresh beginning. Arizona Chapter 7 bankruptcy is a kind of debt liquidation where a trustee will be assigned to collect all of your assets. Assets which are not exempt are sold and the proceeds of the sales will be used to pay you whatever amount is exempted.
Under Chapter 7, some debts may not be included as allowable for discharge. Some of the disallowed debts are alimony, child support, taxes, student loans and fraudulent credits. Despite exemptions in some cases, Chapter 7 is a kind of bankruptcy that can eliminate almost all of the fillers debts.
Chapter 13, on the other hand, is used by debtors who want to continue their hold on their secured assets. You may want to keep those assets, such as the home or car, because you have enough equity in them – more than what can be
protected by the bankruptcy exemptions.
Under Chapter 13, you or the debtor proposes a scheme of payment, usually 3 to 5 years repayment plan and the payment will come from any future income of the debtor. As long as you comply with the stipulated payment method, all of the remaining dischargeable debts will definitely be released at the end of the term.
This Chapter 13 does not necessarily erase your liabilities as you are required to pay back your debt. Thus to qualify, you must have a source of income. This is regarded as a favorable approach to debt solution because under this scheme, you are attempting to repay your debts. Also under this chapter, you can retain several items like your house and vehicles and propose an affordable scheme of payment to them.
You will find out that you just cannot choose between the two – Chapter 7 and 13. The necessary criteria have to be met. Many people believe that it is simple and doable by themselves. But the bankruptcy law has too many complexities so that it is still better to consult a lawyer who is well-versed on bankruptcy law.
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