What is the Difference Between Chapter 7 and Chapter 13?
Chapter 7 and
Chapter 13 are very different processes.
Chapter 7 takes only about 4 - 5 months to complete and Chapter 13 will take 3 -
5 years. The form of
bankruptcy that will best suit your personal financial situation. The method by which
it will be determined whether you should file Chapter 7 or Chapter 13
will be based upon the following:
- Your assets and liabilities.
- The income you earn.
- The amount of your disposable income.
- Whether you are buying a home and how much equity you have in the home.
- Whether you have second or third mortgages.
- Whether you have a co-signer on your mortgage you need to protect.
- The types of debts you have, and whether they are secured by collateral.
Should I file Chapter 7 or Chapter 13?
The first step in determining whether you should file Chapter 7 or Chapter
13 is to take the means test. If your income is higher than the state's
median, you will not qualify to file Chapter 7, and can file Chapter 13.
In Chapter 13, the debts you owe (including overdue mortgage payments)
are paid off over a 3 - 5 year period in an individually created repayment
plan. This form of bankruptcy temporarily stops foreclosure proceedings
and all other collection actions. You will have the opportunity to extend
the payment of your secured debts over the entire repayment period, which
can be a great advantage to homeowners. There are limits to the level
of debt you can owe to qualify for Chapter 13.
In Chapter 7, a great number of debt are discharged - they are gone forever.
These include credit card bills, medical bills, utilities, personal loans,
some types of tax debt and others. When a debtor is released from the
obligation of these debts, he or she is in a far better financial situation,
free from the pressure of creditors calling day and night, and can move
on with a fresh start.
Get in touch with our Chicago bankruptcy lawyers!
Do you qualify for Chapter 7 or Chapter 13? Call us and we can assist you
to get the answers you need about your debt problems.
Call today for a Chicago bankruptcy attorneys you can trust.