Definition of Chapter 7 and Chapter 13 Bankruptcy
Chapter 7For your information, Chapter 7 bankruptcy may eliminate most kinds of unsecured debt. Some examples of unsecured debts are credit cards; medical bills; most personal loans; judgments resulting from car accidents; and deficiencies on repossessed vehicles. In addition to getting rid of your debt, you typically can keep all of your property. As long as your car and mortgage payments are current, and there is no significant equity in your property, we should have no problem making arrangements for you to keep your home, keep your car and keep your personal belongings. In addition to eliminating most kinds of unsecured debt, Chapter 7 bankruptcy stops creditor harassment, eliminates repossession debts, stops garnishment, ends lawsuits, and most importantly helps you rebuild your credit. The court filing for Chapter 7 is $299.00. Attorneys' fees for a Chapter 7 typically range from $500 to $2,000.00.
Chapter 13Chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." Finally, Chapter 13 acts like a consolidation loan under which the chapter 13 trustee distributes payments to creditors.