Once you have made the decision to file for
bankruptcy, you will be faced with the decision of choosing which type of bankruptcy
best suits your set of circumstances and will offer you the most effective
form of financial relief. The two most common forms of bankruptcy are
Chapter 7 and
Chapter 13 bankruptcies, both of which serve different purpose. If you are just beginning
to grapple with these questions, chances are you might need some guidance
and are searching for answers. Here is what you need to know about these
two types of bankruptcies.
Chapter 7 Bankruptcy
This type of bankruptcy discharges most types of unsecured debt. If you
file for a Chapter 7 bankruptcy, the bankruptcy trustee will attempt to
sell any non-exempt property to repay your creditors. The process generally
takes between 3 and 4 months to complete.
- There is no limit to the amount of debt you can erase as long as it is
not secured debt.
- Unpaid balances that are due after assets have been distributed are discharged.
- Aside from inheritances, the wages and property you earn or acquire after
filing for bankruptcy are yours, rather than the creditors or bankruptcy court.
- There is no minimum debt required to qualify.
- You will lose any non-exempt property, which will be sold by the bankruptcy
trustee to repay your creditors.
- There are some exceptions to the types of debt you can eliminate. For example,
a mortgage lien will survive this type of bankruptcy and can be collected
after your case is closed.
- If your debt has a co-signer, they will be stuck with your debt unless
they also choose to file for similar protection.
- You can file a Chapter 7 bankruptcy only once every 8 years.
Chapter 13 Bankruptcy
With this type of bankruptcy, you can repay your creditors, whether in
full or in part, through a repayment plan, which lasts 3 or 5 years, depending
on your income. When this period of time concludes, many of your unsecured
debts will also be discharged. Additionally, because this option uses
a repayment plan, your property will not be liquidated.
- Debts that cannot be cancelled in a Chapter 7 bankruptcy may be reduced
in a Chapter 13 bankruptcy.
- You will have protection against the collection efforts of creditors.
- If you have any co-signers, they will be immune from creditor’s efforts
as well, assuming that the Chapter 13 repayment plan repays them in full.
- You can file this type of bankruptcy after filing for a Chapter 7 bankruptcy
to pay off any remaining debts that were not discharged.
- There is no limit on how often you can file a Chapter 13 bankruptcy.
- This option enables you to separate creditors by class, assigning different
percentages of payment to each class.
- You will have to pay your debts out of your disposable, post-bankruptcy
income, which will tie up your cash until the repayment period ends.
- Some debts will survive this type of bankruptcy and you must continue to pay them.
- Stockbrokers and commodity brokers are not eligible for a Chapter 13 bankruptcy.
Before you can file for either one of these options, you must receive credit
counseling from an approved institution, which must take place within
6 months prior to your filing date. You are also required to attend a
debtor education course after officially filing the paperwork.
Bankruptcy Attorneys in Jacksonville & St. Augustine
At Albaugh Law Firm, we understand that financial difficulties can create
a great amount of stress, causing individuals to feel helpless and overwhelmed.
We are here to answer all of your questions, guide you through every step
of the process, and advise you on the best course of action to relieve
you of your debts in the most effective way possible. Our bankruptcy attorneys
have been helping individuals live debt-free lives for more than 60 years,
and would be honored to do the same for you. You should not have to face
this alone. With the right representation, you can get your life back
on track and embark on a fresh start, without the threat of debt collectors
looming over your future.
You are more than just a client to us. Our firm invests in the lives of
those we serve and will dedicate our time, resources, and skills to easing
your financial troubles.
Contact us today for more information on how we can assist you at
(904) 637-1839. We provide free consultations.