Types of Bankruptcy: Chapter 7 vs. 13

The decision to file bankruptcy is not an easy one for anyone to make. If it seems as though
debt
you are drowning in debt, and there is no way out, filing for bankruptcy can help you get out from under that debt and start over again with a clean slate.

Most individuals will choose between two types of bankruptcy: Chapter 7 Bankruptcy – “liquidation” or Chapter 13 Bankruptcy – “reorganization.”

A bankruptcy attorney is the best person to discuss your options with before making any decisions. The eligibility rules differ for each type of bankruptcy, and you may only qualify for one option.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy South FloridaThe Chapter 7 Bankruptcy is the most common form of individual bankruptcy.

The terms “complete bankruptcy,” “liquidation,” and “straight bankruptcy” are also used to describe a Chapter 7 Bankruptcy.

With this type of bankruptcy, the debtor can make a fresh start and rebuild his or her credit.

The trustee will collect the debtor’s nonexempt assets once the Chapter 7 Bankruptcy is filed and then reduce them to cash to distribute among the creditors.

The debtor will typically receive a discharge that releases him or her from any personal liability for the discharged debts.

Filing of a chapter 7 Bankruptcy is recommended if you have limited assets, there is no chance of you repaying your debts, or if any legal action by creditors is imminent.

Chapter 13 Bankruptcy

The Chapter 13 Bankruptcy differs as it offers a chance for individuals who want to pay Chapter 13 Bankruptcy South Floridatheir debts a way to accomplish this without losing valuable assets.

In a Chapter 13 Bankruptcy, a plan is formulated that illustrates how the debtor expects to repay creditors during a period of three to five years, and then this plan is presented to the court for approval.

Once approved by the court, the debtor makes payments to each of the creditors involved through a trustee.

Chapter 13 Bankruptcy protects an individual from:

  • Wage garnishments
  • Lawsuits
  • Creditor contact and harassment

Once the payment plan is complete, the remaining debts are discharged.

Chapter 13 Bankruptcy can help people who are behind in their mortgage payments save their house by paying back mortgage arrears.

Filing the proper type of bankruptcy for your needs can remove a burden of debt and provide peace of mind going forward in your life.

If you would like additional information about your bankruptcy options, please contact Coral Springs attorneys Brodzki Jacobs & Associates, PL at (954) 344-7737 to schedule a bankruptcy consultation.

 

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