The Difference Between Chapter 7 And 13 Bankruptcy

chapter 7 vs 13 bankruptcy at a glance

Sometimes you might find yourself facing unexpected financial problems such as medical problems or best investments. In that case, you might be unable to pay some or all of your bills. If you are facing this kind of problem, you should be aware that you have options. One of your options is to declare bankruptcy. Bankruptcy is a legal process that is recognized by the courts. You will need to officially file for this legal process. Then you need to go through a process that allows you to discharge some or all of your debts and start all over again which is why it is suggested to find a reputable bankruptcy lawyer in Houston, TX.

Types of Bankruptcy

Bankruptcy is not a single process that covers all circumstances. Several types of bankruptcy exist. The kind of bankruptcy that you choose to file will depend on multiple factors including your overall debt load, your present income and your ability to pay back any money to your creditors. Any type of bankruptcy will be known by a number such as chapter 7 or chapter 11. Each type of bankruptcy has different rules and different procedures that must be observed and followed in a court of law. Your lawyer will help you figure out which type of bankruptcy is right for you.

Chapter 7 Bankruptcy

One of the most common types of bankruptcy is chapter 7 bankruptcy. Under this form of bankruptcy, you get to wipe out all your unsecured debt such as any credit card bills and your medical bills. You will not owe anything. In turn, your finances will be supervised by a trustee. They will sell off any thing you own that is considered non-exempt from bankruptcy laws. To be able to file this kind of bankruptcy, you will often need to demonstrate that you have very little income.

Chapter 13 Bankruptcy

Another common type of bankruptcy is chapter 13 bankruptcy. If your income is too high to file for chapter 7 bankruptcy, your only alternative may be this kind of bankruptcy. Unlike chapter 7 bankruptcy, you will need to make payments on any debt you owe. This process will typically take three to five years. This is a reorganization that gives you some breathing room to catch up rather the straightforward liquidation of the chapter 7 bankruptcy. This kind of bankruptcy filing, unlike that of the chapter 7 filing, will let you keep some of your property provided you pay your creditors properly.

What Type of Bankruptcy is Right For Me?

The kind of bankruptcy that is right for you depends on multiple factors. If you earn more than a certain amount of money or have more than a certain amount of assets, you may have no choice but to file chapter 13 rather than chapter 7 bankruptcy. Many people opt for chapter 7 if they can as it lets them make a clean break with the past and start all over again financially. In all cases, you should consult with a lawyer for further information about which procedure is right for your specific needs and fiscal circumstances.

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