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Chapter 7 Bankruptcy And Chapter 13 Bankruptcy
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
You must decide which type of Bankruptcy is right for you, if you qualify
for both. With Chapter 7, you will have your debts forgiven. With
Chapter 13, you will still have to pay your debts, though the amount
may be lowered.
- Chapter 7 Bankruptcy helps consumers to write-off their debt in
the space of three to six months.
- Chapter 13 Bankruptcy
helps those with non-exempt assets to restructure their debt.
The Court now has greater powers in deciding the right
Chapter for a debtor. Both options will affect personal credit scores.
Chapter 7 Bankruptcy :
Individuals opting for Chapter 7 Bankruptcy provide the list of their
non-exempt assets to a trustee. These are sold and the proceeds are
paid to creditors. Though an insolvent filing for Bankruptcy under
Chapter 7 have very few assets is able to escape any debt problems
and become debt-free very quickly.
Chapter 7 Bankruptcy and the 'Means Test':
The Chapter 7 Bankruptcy requires the applicant to pass a "Means
Test" the debtor mush show that the last six months they earned below
the median income for their state. Filing for Bankruptcy under Chapter
7 is unlikely to be approved by the court. if an applicant has a
high disposable income or non-exempt assets that could be sold and
distributed to creditors. In practice most people prefer Chapter
13 Bankruptcy or debt management as an alternative debt solution.
Chapter 13 Bankruptcy
- Chapter 13 Bankruptcy seeks to reschedule payment of debts over
a period of 3 to 5 years
- It provides protection from further debt collection or foreclosure
- People not only reorganize their debt but also get their life reorganized
- It doesn't have an adverse effect on the credit score as the creditors
get paid