How do I decide which Chapter of Bankruptcy to file?

When you are filing for personal bankruptcy you have two choices you have Chapter 7 and Chapter 13. Chapter 7 is liquidation and Chapter 13 is repayment or organization of your debt. The main reasons why most people file for personal bankruptcy are too many medical bills that insurance won’t cover or you have no medical insurance, too much credit card debt (which is the most common), divorce and loss of employment. Financial strain takes a big toll on you as well as your family so many people feel so much stress that eventually they file because they feel like they are drowning.

If you decide that this is the way you need to proceed then read the laws and understand them so as you file you will have a better understanding of what is going on. When filing for bankruptcy you could consult an attorney if there are some things you don’t understand, you may need to hire an attorney if you are filing Chapter 7 or anything that involves property such as a home you may want to ensure you keep your home and an attorney can prove useful here.

Deciding which to Chapter to file can be very important, you want to understand what each chapter means. Chapter 13 is when the debtor which is you is allowed to keep their property and the court creates an interest free payment plan that allows you to repay the creditors you owe money to. You will receive a written plan of how the plan is going to work and when you are to pay and how much. The court takes into consideration how much money you make and what other financial responsibilities you have.

Repayment tales place no more than 45 days after the case is filed. The United States Bankruptcy Code allows the debtor a cap of 5 years to pay back the creditors. The repayment is overseen by the courts. With Chapter 13 you will receive a full discharge unlike Chapter 7 that does not allow that. You must have and be able to prove that you have a regular income that would enable you to pay back the creditors.

When you file for Chapter 7, a trustee is appointed who will collect all non exempt property and sells them and then takes the money he made from the sale and distributes them to the creditors you owe money to. There are no payments to the trustees like in Chapter 13. In some cases you may lose all of your assets and that is why it is recommended that you do not handle Chapter 7 at all yourself, consult or hire an attorney. You may be able to hang on to some of that property.

A business or an individual can file for Chapter 7 if they choose to, sometimes people who don’t have an income file this Chapter because they don’t have any resources to repay the creditors, ask an attorney which Chapter would be best for you.