Bankruptcy Basics: Chapter 7 and Chapter 13

WHAT IS BANKRUPTCY?

Do you have credit card bills? Are utilities going unpaid? Are you afraid of being evicted or losing your home? If you answered yes to one of these questions, bankruptcy may be right for you. Bankruptcy allows you to get a fresh start by removing your personal liability for certain types of debt. Bankruptcy can be a long process or a short process, depending on your income and the amount of property you own. The two most common types of bankruptcy are Chapter 7 and Chapter 13. 

CHAPTER 7 BANKRUPTCY

A Chapter 7 bankruptcy is available to you if you make below a certain amount of income. This type of bankruptcy is a relatively fast process, and typically takes one to four months. There are two subtypes of a Chapter 7 bankruptcy that I will talk about at a later time; asset cases and no asset cases. 

CHAPTER 13 BANKRUPTCY

A Chapter 13 bankruptcy is a much longer process than a Chapter 7 bankruptcy. This type of bankruptcy is for you if you make above a certain level of income. This type of bankruptcy can take between three to five years to complete. You set up a payment plan with the court during this type of bankruptcy, and that payment plan is used to pay down your debts.

WHY YOU NEED A LAWYER

Bankruptcy is complicated. There are dozens of documents that need to be filed with the court and several things you must do before you can qualify. If you fail to properly complete the paperwork, your bankruptcy may be dismissed and you may still be on the hook for your debts.

You also need a lawyer to help you determine which type of bankruptcy is best for you. If you are considering bankruptcy, contact a lawyer.