Filing Chapter 7 or Chapter 13 is very different.
If you are facing bankruptcy you want to have a clear understanding of both so you are sure to choose the one that will help your situation the most.
Bankruptcy is a serious step with long term effect so you want to make good choices.
Between the two types of bankruptcy Chapter 7 is the one most sought after.
The courts make a determination on what assets can be liquidated to pay off some outstanding debt.
In some states there are assets that are protected in bankruptcy so that the debtor does not loose everything.
For example, in most places you are left with a home and transportation.
At one time it was easy to qualify for Chapter 7 bankruptcy but all that changed in October of 2005.
That year the laws got tougher and now you are required to be below a certain income level and have very few assets that could be liquidated.
If you can pay off up to 25% of your debt by liquidating your assets you cannot qualify for Chapter 7 bankruptcy.
There are some exceptions depending on special needs.
Hurricane Katrina, for example, created a special need for many people and an exception was made in the case of those who suffered great loss because of that terrible natural disaster.
If you present your case to bankruptcy court and you are denied that does not have to be the end of it.
There is an appeal process, but it is lengthy and costly so you want to be sure that you have a strong leg to stand on.
If you feel that you have a strong case it might be worthwhile to file an appeal.
Chapter 13 bankruptcy is a totally different situation.
You are not required to sell any of your belongings.
Instead the courts look at your debt and your income and based on the information decide what you can reasonably afford to pay and in what timeframe.
Then a payment plan is established through the courts for repayment of your debts.
The new bankruptcy laws had an effect on Chapter 13 as well.
Before your life expenses were figured by bankruptcy court.
Now that is no longer the case.
The Internal Revenue Service has a formula that figures this amount for the courts.
If you are facing bankruptcy you want to have a clear understanding of both so you are sure to choose the one that will help your situation the most.
Bankruptcy is a serious step with long term effect so you want to make good choices.
Between the two types of bankruptcy Chapter 7 is the one most sought after.
The courts make a determination on what assets can be liquidated to pay off some outstanding debt.
In some states there are assets that are protected in bankruptcy so that the debtor does not loose everything.
For example, in most places you are left with a home and transportation.
At one time it was easy to qualify for Chapter 7 bankruptcy but all that changed in October of 2005.
That year the laws got tougher and now you are required to be below a certain income level and have very few assets that could be liquidated.
If you can pay off up to 25% of your debt by liquidating your assets you cannot qualify for Chapter 7 bankruptcy.
There are some exceptions depending on special needs.
Hurricane Katrina, for example, created a special need for many people and an exception was made in the case of those who suffered great loss because of that terrible natural disaster.
If you present your case to bankruptcy court and you are denied that does not have to be the end of it.
There is an appeal process, but it is lengthy and costly so you want to be sure that you have a strong leg to stand on.
If you feel that you have a strong case it might be worthwhile to file an appeal.
Chapter 13 bankruptcy is a totally different situation.
You are not required to sell any of your belongings.
Instead the courts look at your debt and your income and based on the information decide what you can reasonably afford to pay and in what timeframe.
Then a payment plan is established through the courts for repayment of your debts.
The new bankruptcy laws had an effect on Chapter 13 as well.
Before your life expenses were figured by bankruptcy court.
Now that is no longer the case.
The Internal Revenue Service has a formula that figures this amount for the courts.