You have made the decision to file bankruptcy and now you need information on which bankruptcy chapter best fits your situation.
Total Lawyers has a network of sponsoring bankruptcy attorneys to assist you in filing your case.
All you have to do is give us a call at 877-421-3761 or complete our free bankruptcy evaluation form, and we'll connect you with a bankruptcy attorney in your area within minutes.
Most individuals have two options when considering filing bankruptcy - Chapter 7 and Chapter 13. While other bankruptcy chapters do exist, Chapter 7 and 13 are the most common for individual debtors.
Which chapter may be most appropriate for your situation will depend upon a couple of things. A bankruptcy lawyer can help define some determining factors in your case before you submit a bankruptcy petition to the court for review. Let's take a look at Chapter 7 and Chapter 13.
Option #1: Chapter 7
Chapter 7 bankruptcy is a legal process that allows most unsecured debts to be cancelled, or "discharged."
Chapter 7 bankruptcy is often referred to as liquidation because the bankruptcy trustee may sell your assets - those not exempt under bankruptcy laws - to benefit your creditors. However, if you are eligible to file Chapter 7, you may not have many non-exempt assets to begin with.
Chapter 7 bankruptcy is usually the better option for those whose debts, such as credit card debt and medical bills, are mostly unsecured. Chapter 7 bankruptcy might be the best option for those don't have many assets, whose income is below the median, and the majority of their debts are not secured.
In order to file for Chapter 7 bankruptcy protection, you will be required to pass a two-step means test.
Don't panic, the means test is not your traditional exam, but it is a median income comparison of your household income to the median income of a family of equal size in your state.
If you don't fall below the median income in your state, then part two of the test kicks in. Step two of the means test involves calculating your disposable income and unsecured debts. A bankruptcy attorney can help you with the number crunching associated with the means test.
If you don't "pass" the means test, don't worry, you still have another possible option under Chapter 13 bankruptcy.
Option #2: Chapter 13
In Chapter 13 bankruptcy, the bankruptcy court administers a full or partial repayment plan of what you owe creditors. This process involves submitting a plan to the court and if that plan is approved, the bankruptcy trustee collects monthly payments from you. The trustee is in charge of paying off creditors according to the terms of the approved plan.
This repayment plan can take anywhere from 3-5 years, after which, if all payments have been made on schedule according to the plan, you will receive your bankruptcy discharge.
It's generally less complicated to qualify for Chapter 13 bankruptcy than it is to qualify for Chapter 7, since there's no means test for Chapter 13.
Debtors who don't qualify for Chapter 7 will often file for bankruptcy under Chapter 13.
It is important to keep in mind that if you file for Chapter 13 bankruptcy, you must have a regular income so you can create a realistic repayment plan and can stick to the payments you must give the trustee each month.
A bankruptcy attorney can definitely assist you in filing a Chapter 13 petition, and Total Lawyers can connect you with a bankruptcy attorney in your area right away.
Simply give us a call at 877-421-3761 or complete our free bankruptcy evaluation form to be connected with a local attorney now.