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New Bankruptcy Laws: Chapter 7 And Chapter 13 Bankruptcy Information

Posted by attorney John Habashy

There could be different rules for filing personal bankruptcy under chapter 7 or 13. Therefore, choosing the right option for securing debt relief could be a challenging task. This only necessitates the urge for proper federal bankruptcy information for debtors who are considering filing bankruptcy. Typically, a chapter 7 bankruptcy is capable of discharging all personal debts. A chapter 7 liquidation process usually involves selling off the debtor's assets except exempted ones for repaying the creditors. Nevertheless, as per the new bankruptcy laws and regulations, if the monthly income of the bankruptcy filer is high, he may not qualify for chapter 7. To add to that, chapter 7 cannot be re-filed for at least 8 years after discharge of debts. On the contrary, in a typical chapter 13 bankruptcy, the debtor is required to propose a monthly repayment plan which is scattered over 3 to 5 years in order to repay his creditors. And after the plan is successfully executed and the creditors are repaid, the debtor can qualify for discharge of debts. But debtors are allowed to retain all owned assets even while he continues to repay the creditors through a court approved plan. In addition, as compared to chapter 7, chapter 13 bankruptcy filings permits debtors to file for another bankruptcy within shorter durations which in some cases could be as less as 2 years.

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