If you are considering filing for bankruptcy it is important to understand the differences between Chapter 7 and Chapter 13 bankruptcy and which suits the circumstances you are facing currently.
Chapter 7 and Chapter 13 are different in many ways and choosing which one you claim will influence what steps you will need to take and the potential benefits you will receive.
Specific to whom?
With Chapter 7 bankruptcy, you are filing for liquidation of all your assets and both individuals and business entities can file this claim.
These businesses must have an income low enough to pass the Chapter 7 means test whereas Chapter 13 filers cannot have more than three hundred thousand of unsecured debt or more than one million dollars of secured debt.
This is different from Chapter 13 bankruptcies when you are filing bankruptcy to reorganize your finances and only individuals, which include sole proprietors, can file this claim. An experienced bankruptcy attorney in Valdosta can help you decide which is the best option for you.
Timing and Property
Timing wise, Chapter 7 takes about three to five months whereas Chapter 13 concludes when all plan payments are completed which usually is from three to five years.
In the case of property, Chapter 7 dictates that all nonexempt property be sold by trustees to pay the creditors. In Chapter 13 bankruptcy, however, all property is kept by debtors in Chapter, but the debtors must pay unsecured creditors the value of nonexempt assets.
Benefits of filing:
Understand the benefits for filing each claim will help you find which claim is best suited for your specific circumstances.
Filing for Chapter 7 bankruptcy allows a business or individual in debt to quickly discharge most of their debt while getting a clean start afterward.
In contrast, filing for Chapter 13 bankruptcy allows debtors to keep their property while catching up on their missed mortgages, car, and non-dischargeable priority debt payments allowing them space to repay their debtors without losing everything.
Researching the differences between Chapter 7 and Chapter 13 bankruptcy is important for anyone wishing to file bankruptcy to lower their debt. If you are ready to start the process, contact a bankruptcy attorney in Valdosta such as Charles Farrell Law.
