Chapter 7 and Chapter 13 cases are the most common type of bankruptcies filed in the United States. When it comes to determining what bankruptcy case to file, you have to consider your income, asset, debt, and financial goals. What is the meaning of Chapter 7 bankruptcy? Chapter 7 refers to the liquidation bankruptcy which aims to eliminate all general unsecured debts such as medical bills and credit cards. However, for those who make too much money may file a Chapter 13 bankruptcy instead of Chapter 7. Generally, the Chapter 7 bankruptcy is recommended for low-income debtors since they have little or no asset to liquidate in paying their unsecured debts.
When a person files a Chapter 7 bankruptcy, a trustee is usually appointed to review the bankruptcy papers and documents and sells the debtor’s nonexempt properties to pay the creditors, and if there are no assets to sell, the creditors will not receive anything. For people with a steady or regular source of income, they can still file a bankruptcy case under the Chapter 13 bankruptcy and pay a portion of their debts through a flexible and realistic repayment plan. A person can keep all his properties including those assets that are nonexempt under the Chapter 13 bankruptcy. The Chapter 13 bankruptcy is designed for debtors who can pay a portion of their debt, and the amount depends on the income, expenditures, and other types of debts. If you want to catch up on a missed auto payment or mortgage loan, or in paying off non-dischargeable debts like child support arrears or alimony, you can file a Chapter 13 bankruptcy. While there are simple cases of Chapter 7 bankruptcy, you may need to hire a bankruptcy lawyer for complex cases involves preparation of a large set of forms and navigation of overwhelming and confusing legal matters.
If you are an unemployed debtor without a residential property or your own home, no car, and no asset at all, the most effective and fastest way to get rid of your debt is through Chapter 7 bankruptcy. That is the very reason why Chapter 7 bankruptcy is also called as “no asset” bankruptcy. For unemployed homeowners with a house value lesser than the lien against it, the house is technically protected from liquidation, and filing a Chapter 7 can help them relieved of their obligations. Learn more about the Chapter 7 and Chapter 13 bankruptcy by visiting our homepage or website now. Know your rights in the justice system, because it is always good to know your options when it comes to filing a bankruptcy case, and you can always hire a bankruptcy lawyer to help you process your case.