Chapter 7 bankruptcy and chapter 13 bankruptcy
Chapter 13 is technically supposed to stay on the debtors record for ten years, but in real practice it stays on for seven. This particular feature encourages people to file for Chapter 13 bankruptcies over Chapter 7, because it allows the creditors to receive something rather than almost nothing, in the case of a Chapter 7.
1. Chapter 7 Bankruptcy and Chapter 13 BankruptcyAuthor : Jim KnightCongress made sweeping changes to the bankruptcy laws that gave consumers moreincentive to seek bankruptcy relief under a different Chapter rather than Chapter 7. Thiswas called Chapter 13. This particular Chapter allows people with a steady income tokeep property, like a car or a mortgaged house, that they might otherwise lose throughthe Chapter 7 bankruptcy process. These changes took effect from October 2005.All in all, there are four bankruptcy chapters in United States bankruptcy law: Chapter 7,11, 12, and 13. Chapters 7, 11, and 13 are by far the most common, Chapter 7 being themost. These bankruptcy laws have many similarities and differences. Here are a few ofthem.In case of Chapter 13, the court can approve a payment plan that can run up to fiveyears. This process lets you pay off todays debts with future earnings. Although, youhave to have a steady source of income to qualify for this filing.On the other hand, Chapter 7 bankruptcy is known as "straight bankruptcy." About twothirds of all bankruptcies fall under Chapter 7. In this case assets are sold and theproceeds are given to creditors for debt repayment. Chapter 7 can be filed every eightyears, although it is bound to stay on your credit report for ten years. It looks bad tolenders, and it makes getting credit almost impossible in the couple years following thefiling. This particular bankruptcies chapter can be voluntary or involuntary, often beinginitiated by creditors.Chapter 13 bankruptcies are quiet different from Chapter 7s because they do noteliminate debt. Instead, they restructure it. Firstly, a payment plan is set up, whichusually takes three years but can last as long as five and any remaining debt after theplan terminates is eliminated. Chapter 13 is looked upon more kindly than a Chapter 7due to the existence of the partial payment system.Chapter 13 is technically supposed to stay on the debtors record for ten years, but inreal practice it stays on for seven. This particular feature encourages people to file forChapter 13 bankruptcies over Chapter 7, because it allows the creditors to receivesomething rather than almost nothing, in the case of a Chapter 7.Chapter 13 bankruptcies can be filed in every two years unless a Chapter 7 was filedpreviously. In cases like these the applicant must wait four years from the time of filingthe Chapter 7. Most of the debt gets eliminated through Chapter 7, and a payment planis set up for the remaining with Chapter 13. 2. Although bankruptcies share many similarities, there are important differences. None ofthem look good, but Chapter 13 looks better than Chapter 7. All of them adversely affectones ability to get credit, especially during the first couple years following thebankruptcy filing.However, the great thing about the US is that one can always get a second chance.Bankruptcies are not the end of the world, and one can recover from them with effort.For more information Click Here What Happens After File BankruptcyThe process in which consumers and businesses can eliminate or repay a portion or all oftheir debts is also known as the bankruptcy filling. This can be done under the protectionof the federal bankruptcy court. Bankruptcies are split into two types - liquidation andreorganization, organized under different Chapters of the US Bankruptcy Code.After a long consideration, when a person has reached the final verdict that bankruptcy isthe only way out, he or she must be aware that filing bankruptcy is an intricate processand one must be very sure before applying. There is a strict time limit which must bemet in order to get the bankruptcy filed properly to the courts. The first thing to learn inthis process is to know what bankruptcy filling is all about and how to avoid it. One canlearn about these things from a credit counselor.After going through the basics one has to file a petition with the bankruptcy courts withinthe area they live in. The debtor will be offered to pay the legal fees in installment or insome rare, extreme cases these fees will be waived. This decision is made by the courtand every bankruptcy case is different from the next. Many people have been under theimpression that there is a standard and generic way to handle bankruptcy filings, when infact every bankruptcy case is unique in their own way.The court will then review all the creditor documents and debts and make their decisionas to how to go about paying back these debts. At times the court might hold a meetingwith the main creditors and try to come to an agreement to solve the problem. This iswhere many people learn they have believed a myth. It is a general misconception tobelieve that the creditors never get their money and therefore they become enemies. Butin reality, the debts get settled and the creditors understand that these things canhappen.After that meeting is over, it is determined whether the case falls under the type of anasset or a non asset. If it is held as a non asset, then the debtors involvement in thecase gets over unless something unexpected occurs. On the other hand if the case isdeemed an asset this means that the court will have the right to sell the debtors homeand any other assets he or she has in their name in order to pay off the remaining debts.This is why; it is advisable to speak with financial professionals before making radicaldecisions. There are many bankruptcy rules and these professionals know how to makeappropriate use of them.Understanding the whole process is necessary to an individuals financial success. One 3. doesnt have to learn the bankruptcy laws as well as a financial advisor but an overallunderstanding is really beneficial. Filling for bankruptcy is a serious financial step inanyones life and can be recovered from when someone takes each step very carefully.For more information Click Here