Chapter 7
In A Nutshell:
- You Cannot Pay Your Existing Debt
- In Chapter 7 You Keep Most (Maybe All) Of Your Property/Possessions
- Continue To Pay On Secured Debts (Mortgage, Car Loan) If You Want The Item (House, Car)
- Or Eliminate Your Secured Debts (Mortgage, Car Loan) If You Do Not Want The Item (House, Car)
- Unsecured Debt (Credit Cards, Medical Bills) Are Wiped Away, Permanently
- You Must Qualify For Chapter 7
- Complete the iBANKRUPTCY Intake Form For Our Analysis
You Cannot Pay Your Existing Debt
Chapter 7 Bankruptcy is designed for people who do not have the ability to pay for all of their existing debt. The cause for the inability to pay may be job loss or loss of income, health related issues, divorce, death of a spouse or supporting family member or friend, or many other unfortunate situations. For most, it would take a lifetime to pay their debt when compared to their current income.
You Keep Most (Maybe All) Of Your Property/Possessions
In a Chapter 7 Bankruptcy you are allowed to claim a certain value of your property as exempt. “Exempt” essentially means that you will keep your property rather than having to let the Bankruptcy Trustee take the property and sell it to pay for a portion of your debt. In most Chapter 7 Bankruptcies, the person is able to exempt (and keep) all of their property. This is a big reason why a proper analysis of your situation is necessary before entering into a Chapter 7 Bankruptcy.
Continue To Pay On Secured Debts (Mortgage, Car Loan) If You Want The Item (House, Car)
When entering a Chapter 7 Bankruptcy, you can decide (in most cases) to keep your secured debts if you desire. For example, if you file a Chapter 7 Bankruptcy and have a house with a mortgage and a car you are paying for, then you can choose to keep your house and car as long as you continue to pay for the debts. The equity in these items must be exempt (as discussed above), you must be able to afford the debt payments, and there are limits to the amount of secured debts you will be allowed to keep. You should be current on your monthly payments of secured debts before entering into a Chapter 7 Bankruptcy.
Or Eliminate Your Secured Debts (Mortgage, Car Loan) If You Do Not Want The Item (House, Car)
Rather than keeping the house with a mortgage and/or a car you are paying for, in a Chapter 7 Bankruptcy you can choose to surrender the property and eliminate the debt. You will not have the house or car anymore but will also not have to pay the mortgage or car payment. The debt will be treated similar to unsecured debts (discussed below).
Unsecured Debt (Credit Cards, Medical Bills) Are Wiped Away
In a Chapter 7 Bankruptcy, your liability for unsecured debts is wiped away. Unsecured debts are things like credit cards, medical bills, and personal loans. As long as you qualify for Chapter 7 Bankruptcy and are able to exempt all of your property (discussed above), then you will not have to pay anything to your unsecured creditors.
You Must Qualify For Chapter 7
Qualification for Chapter 7 Bankruptcy can be a complicated process. The law has established something called the “means test” to determine if you qualify. Essentially, if you make too much income, then you cannot file a Chapter 7. If you make under a certain amount, then you can file a Chapter 7. When analyzing your situation through the means test, the law considers several factors including your household size, income, and expenses. Because of the complexity of the means test a proper analysis of your situation is necessary before entering into a Chapter 7 Bankruptcy
Chapter 13
In A Nutshell:
- You Have Steady Income But Cannot Afford All Of Your Debt
- In Chapter 13 You Keep Most (Maybe All) Of Your Property/Possessions
- Enter Into A Debt Payment Plan
- Stop Foreclosure
- Stop Repossession
- Unsecured Debt (Credit Cards, Medical Bills) May Receive A Percentage Of Balance And Then Are Wiped Away
- Complete the iBANKRUPTCY Intake Form For Our Analysis
You Have Steady Income But Cannot Afford All Of Your Debt
Chapter 13 Bankruptcy is designed for people who have household income that can be used to pay back part or all of their debt. Your income may be from employment, social security, disability, or other forms. You need to have enough income to afford to make the bankruptcy payment (discussed below) and to live on.
You Keep Most (Maybe All) Of Your Property/Possessions
In a Chapter 13 Bankruptcy you are allowed to claim a certain value of your property as exempt. “Exempt” essentially means that you will keep your property rather than having to let the Bankruptcy Trustee take the property and sell it to pay for a portion of your debt. In most Chapter 13 Bankruptcies, the person is able to exempt (and keep) all of their property. This is a big reason why a proper analysis of your situation is necessary before entering into a Chapter 13 Bankruptcy.
Enter Into A Debt Payment Plan
Through the Chapter 13 Bankruptcy you enter into a payment plan. This monthly payment will become the only debt payment you make. Certain secured debts have to be paid through your monthly payment, and other debts, depending on your situation, may not be paid anything. Our analysis of your situation will allow us to determine what debts have to be paid, what debts do not have to be paid, and ultimately what your monthly payment will be.
Stop Foreclosure
In order to save your house and stop a foreclosure from occurring, you may need to file a Chapter 13 Bankruptcy. Upon filing a Chapter 13 Bankruptcy, the foreclosure will immediately be stopped. Through the monthly Chapter 13 payment, you will pay your regular, ongoing monthly payment as well as the amount you are behind on the mortgage. By the end of the bankruptcy, your mortgage will be current and the foreclosure will be long behind you.
Stop Repossession
If you are behind on your car payment, filing a Chapter 13 Bankruptcy will stop your car from being repossessed. Your car will be paid for through your monthly payment. By the end of the bankruptcy, the debt on your car will be gone and you will receive your car’s title. If you have had your car for less than 910 days, then you will pay the full balance owed on your car over the course of the bankruptcy. If you have had the car for more than 910 days then you will pay whatever is less between the balance owed on the car and the value of the car. Our analysis will allow us to show you exactly how your car will be paid for through your bankruptcy.
Unsecured Debt (Credit Cards, Medical Bills) May Receive A Percentage Of Balance And Then Are Wiped Away
Unsecured debts (i.e. credit cards, medical bills, personal loans) are treated differently than secured debts (i.e. car loan, mortgage) in a Chapter 13 Bankruptcy. In many bankruptcies, the individual will pay nothing towards unsecured creditors. Others will have to pay a percentage of the unsecured debts. Whether or not you pay a percentage depends on many factors in your situation. The information you provide will allow us to filter your situation through this complex analysis and determine if any unsecured debts will be paid.