A Bankruptcy Lawyer’s Blog

Chapter 7 and Chapter 13 Bankruptcy Explained

We are familiar with the word bankruptcy but we are oftentimes confused about the main difference between Chapter 7 and Chapter 13 bankruptcy. Having this information on hand will make it easier for us in case we need to file one. Simply put, Chapter 7 Bankruptcy means that all non-exempt property of the debtor will be sold and the proceeds will be distributed to the creditors. This type is also more commonly known as straight bankruptcy or liquidation which simply means conversion of assets into money. It also comprises 65% of all consumer banking filings. Who would sell your assets and eventually distribute the proceeds? This is where a trustee is needed to do this job and yes you have to pay the trustee as well for his service. You also have to know that there are 19 general classes of debt covered in Chapter 7 bankruptcy like student loans and child support. What’s good about this bankruptcy type is that you have the option to retain some of your properties. Talk to your lawyer about this and help him consider your options and choose what’s best according to your situation.

Chapter 13 bankruptcy on the other hand involves debt restructuring. It does not require the debtor to sell his properties. The primary aim of Chapter 13 is to help you pay whatever you owe in better terms and lower interest rates by making use of your income. This type should be filed only if you have a steady income and you can afford to request for the mentioned adjustments or terms. The United States bankruptcy code provides as much as 5 years to pay all your creditors. Once the case has started, you have to pay within 30 to 45 days depending on what is stated in your restructured payment plans. Chapter 13 bankruptcy may have a lesser impact when it comes to your credit record because in here, you are actually displaying an interest to pay your debts. This is also good for you if you have a regular income and don’t want to lose your assets.

Choosing the right lawyer for your financial situation is a crucial decision. Feel free to stop by http://www.barrowcountyattorneys.com and see our featured attorney in Barrow County Georgia