Is Chapter 7 or Chapter 13 bankruptcy right for you?
There are two types of bankruptcy available to consumers: Chapter 7 and Chapter 13.
February 09, 2013
Is Chapter 7 or Chapter 13 bankruptcy right for you?Article provided by Genova & Malin, Attorneys at Law
Visit us at http://www.hudsonvalleybankruptcylawyers.com
Bankruptcy is a legal process that allows consumers to manage their debts. There are two types of bankruptcy available to consumers: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, a consumer's debts are discharged, meaning that they are no longer responsible for paying those debts. In a Chapter 13 case, consumers work with the courts to establish a payment plan, so that creditors can be paid back within a certain amount of time.
The differences between Chapter 7 and Chapter 13 bankruptcy
There are a number of differences between Chapter 7 and Chapter 13 bankruptcy, including the following:
Eligibility
In order to be eligible for Chapter 7 bankruptcy, you must be able to prove that you cannot pay your creditors. This determination is made by undergoing a means test, which includes information about your income, the debts that you owe and the property that you own.
In a Chapter 13 bankruptcy case, eligibility is determined by the dollar amount of the debts that you owe -- the limit is $1,081,400 for secured debt and $360,445 for unsecured debt -- and your income. For purposes of this kind of bankruptcy, income can include wages from a job, or benefits such as disability or unemployment.
Required paperwork
There are a number of documents that you must submit to the court when filing for bankruptcy, including a list of creditors, a list of assets, a bankruptcy petition, a list of monthly expenses and copies of all pay stubs received within 60 days of filing. These documents are required for both Chapter 7 and Chapter 13 bankruptcy. If you are filing for Chapter 13 bankruptcy, you must also create a payment plan that outlines how you will pay your creditors back within a certain period of time.
In addition, when you apply for bankruptcy, you are required to pay a fee to the court. For Chapter 7 cases, it costs $306 while Chapter 13 cases cost $281. You may also be required to pay an administrative fee.
Meeting of creditors
No matter which kind of bankruptcy you apply for, you will be required to attend a meeting of creditors, also known as a 341 meeting. During this meeting, you will have to answer questions posed by the bankruptcy trustee regarding your assets, liabilities and financial affairs. Creditors also have the legal right to attend the 341 meeting to inquire as to your finances and also have the legal right in certain circumstances to object the bankruptcy.
Length of the case
Generally, it can take between three to five years for a Chapter 13 bankruptcy case to be concluded. In a Chapter 7 case, it can take three to four months. In addition, both a Chapter 7 bankruptcy case and a Chapter 13 case stays on your credit report for 10 years.
Do you need help with your bankruptcy case?
Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, the process can be stressful and complex. From protecting your interests to double-checking that all necessary paperwork has been completed and filed, it is best to have an experienced legal advocate by your side as you navigate through the bankruptcy court.