Whether you have lost your job or accrued an overwhelming amount of debt that seems impossible to pay, filing Chapter 7 bankruptcy may become a reality for you and your family. Unfortunately, you may not understand the different bankruptcy options available to consumers. If you are ready to take back control of your finances, you must understand your options before filing. Here are a few differences between Chapter 7 and 13 bankruptcy to help you determine which is right for you.
Most people file bankruptcy because they have lost their job and have little to no disposable income. If you are unable to pay bills and basic living expenses due to this loss of income, filing Chapter 7 bankruptcy is your best option.
Chapter 7 is a liquidation type of bankruptcy, which wipes out all of your unsecured debts, including credit cards and medical bills.
Once your attorney files a petition to begin this type of bankruptcy, a trustee will be appointed to your case. This professional will work on your behalf, selling any non-exempt property back to creditors in an attempt to wipe out your debt. Of course, certain items will be exempt, but this will depend on your specific state’s laws. For example, married couples who are filing a joint bankruptcy will be entitled to their own set of exemptions in Texas. Exemptions in Texas may include the home, vehicle value, pensions, and retirement accounts.
Discharging a Chapter 7 only takes between 3 to 5 months, so it is a great option for individuals who want to eradicate debt and start over financially.
If paying a portion of your debt back is possible with your current income, you will not qualify for Chapter 7. However, you are a good candidate to file for Chapter 13 bankruptcy. Known as a reorganization of your debts, Chapter 13 allows you to keep nonexempt and exempt property, but you’ll be obligated to pay a portion of your debts each month.
During the process of filing chapter 13, your attorney will use your income statements to negotiate lower payoffs before setting a monthly payment that will go towards the debts. The payments are placed into a bankruptcy trust, which then disperses the payments to each of your specific debts.
If you are struggling financially, consider consulting a bankruptcy attorney. Each case is different, so your attorney will be able to find a solution suited to your needs. To learn more about your options, including Chapter 7 bankruptcy, contact Collins & Arnove in the Allen, TX area at 972-516-4255.
Collins & Arnove | Chapter 7 Bankruptcy Allen TX | 972-516-4255