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Chapter 7 vs. Chapter 13 Bankruptcy - What You Need To Know

By pomm79, May 9 2018 10:47PM


There are certain differences between Chapter 7 and Chapter 13 Bankruptcy which a debtor needs to be aware of in order to ascertain which option is more appropriate. Under Chapter 7 the debtor is looking for a fresh start through discharging all dischargeable debts and liquidating the debtor's estate. The length of time to discharge the debts is much faster in Chapter 7.


Discharge can occur in a matter of months and the debtor may be able to exempt most of his/her property and retain all post-petition income.


Differences


If a debtor has significant assets which would not be exempt under Chapter 7 and has regular income then Chapter 13 may provide more benefits. The main benefit under Chapter 13 is that the discharge of debt is broader than Chapter 7. In Chapter 13 all debts provided for in the debtor?s plan is dischargeable.


There are still a few exceptions though which are not dischargeable such as: (1) long-term debts where the final payments are due after the proposed final payment of the plan; (2) alimony, maintenance and support payments; (3) student loans made by the government; and (4) debts for death or personal injury caused by debtor driving while intoxicated.


While the discharge of debt is broader under Chapter 13 it does not occur until the conclusion of the plan, which is usually a couple of years after filing of the petition.


This is, in contrast, to discharge occurring in a matter of months under Chapter 7. Contact us today if you would like more information about which bankruptcy option is more appropriate to help you obtain financial stability. Learn more at http://bnkut.com


Why File for Bankruptcy?


By filing Bankruptcy it is a new beginning to your financial freedom.  By doing nothing, your negative items on your credit report will not go away without action.  Yes, filing a bankruptcy will be listed, but your credit is rebuilding.  Many creditors no longer consider you a risk so you’ll be able to get credit again. So why wait?


What are the most common debts that can be discharged?


Credit Cards, Medical Bills, Some Judgments, Repossession Debt, ISF Checks, Eviction or Broken Lease Debt, Past Due Utilities, Some Taxes, Personal Loans, Late fees. This is only a partial list. Most contracts can be discharged. I will review each item with you that are dischargeable under Chapter 7 or chapter 13 bankruptcy before you sign your bankruptcy petition.


Which debts cannot be discharged?


Can child support or alimony be discharged? Most student loans, alimony (spousal support), child support, most charges within 90 days of filing bankruptcy, failure to neither list nor schedule a creditor and have that creditor notified of the bankruptcy filing. Judgments for death or personal injury caused by the the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or drugs, a drug or another substance or Malicious Conduct, Debt incurred under False Pretenses, (example: you get a loan knowing you are filing for bankruptcy or getting a loan based on a false income statement), some taxes (income taxes less than 3 years due and owing and trust fund taxes).


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