Chapter 7 Bankruptcy Introduction
For people forced to file bankruptcy, chapter 7, for the majority of people, is the best choice. A chapter 7 bankruptcy truly is the best chance for getting you a fresh financial start in life. When filing a chapter 7 bankruptcy you are able to eliminate the majority of your debts. A chapter 7, in most cases, will allow you to eliminate all credit card debt, outstanding medical bills, and any legal judgments you are required to pay. There are debts though that cannot be eliminated. For example, unless you are suffering extreme hardship you cannot eliminate your education loans. Also, past due child support and alimony payments cannot be eliminated through bankruptcy. But, taking these limitations, into account, a chapter 7 is probably your best option.
However, one major disadvantage of filing for a chapter 7 bankruptcy is that you may have to sell off property to pay off your creditors. Fortunately, the bankruptcy exemptions allow you to keep some of your property. For example, in my home state of Nevada, you do not have to sell your car it if is worth less than $15,000. Also, if you filed for a homestead exemption, you can keep your house if it worth less than $500,000. So, the majority of individuals will not have to worry about selling off assets if they file a chapter 7 bankruptcy.
Chapter 13 Advantages
However, for some individuals a chapter 13 bankruptcy may be your best option. The chapter 13 Bankruptcy laws require you to make a payment schedule, which lasts for three to five years, to pay off your creditors. After the three to five years have ended you are finished. I will know go into some various reasons why a chapter 13 bankruptcy maybe your best option.a. Too Many Assets
One advantage, of a chapter 13 bankruptcy, is that you are not required to sell your assets to pay off your creditors. For example, my parents have an extensive antique collection that the adore. If they filed a chapter 13 bankruptcy they would not have to sell their antiques collection.
- Make Too Much Money
Also, you may not even qualify for a chapter 7 bankruptcy. The 2005 bankruptcy law requires you to pass a “means test.” What the means test does is state that if your median income is less than that states medium income you are allowed to file a bankruptcy. Otherwise, if you fail the “means test” you are presumed to abuse the system. So, if you don’t qualify for a chapter 7 a chapter 13 bankruptcy may be your only option.
- Want to Keep Your Home
A chapter 7 bankruptcy does not allow you to save your house. You will only be allowed to keep you house, under a chapter 7 when you are up-to-date on your payments. So, if you are behind on paying your mortgage you will be forced to sell you house. Additionally, under chapter 13 bankruptcy, laws you are allowed to strip off your second mortgage. Also, if you are behind in mortgage payments, the chapter 13 bankruptcy laws can allow you to make payment arrangements with the bank.
These are just a few reasons why you may want to consider a chapter 13 vs. chapter 7 bankruptcy. So, as always you need to consult a legal professional such as san diego bankruptcy lawyers. Based upon you specific situation a lawyer can tell you what is the best option- “A Chapter 7 bankruptcy or a Chapter 13 bankruptcy.” With their expertise, knowledge and experience in dealing with this legal system or process, they can certainly help you out. But you just have to be careful and wise in choosing the right and best lawyer for you.