• Practice Areas
  • Profile
  • Client Success Stories
  • Encino
  • Long Beach
  • Sherman Oaks
Questions? Call Us Today
(818) 501-5055
facebook
google_plus
email
  • Practice Areas
  • Profile
  • Client Success Stories
  • Encino
  • Long Beach
  • Sherman Oaks

Chapter 7 or Chapter 13: Choosing the Option That Is Right For You

February 14, 2014
by BurtonLawOffices
Comments are off

The two types of bankruptcy most individuals use are Chapter 7 and Chapter 13. Choosing the best one for you depends on your financial goals, your income and the amount and type of debt you want to be discharged. There are several differences between the two.

Chapter 7

Overview: Chapter 7 is referred to as liquidation bankruptcy. It is available to individuals and business owners who do not have enough disposable income to pay their debts. If your income exceeds the qualifying amount, you may be able to file under Chapter 13.

Under Chapter 7, a trustee is appointed who evaluates your case. The trustee may take certain property and sell it in order to provide payments to your debtors.  There are certain categories and amounts of property that you are allowed to keep that cannot be sold, which is referred to as exempt property.

Benfits: Most of your unsecured debt will be discharged. You will be ready for your fresh start in just a few months and you can begin rebuilding your life and your credit.

Drawbacks: Some debts are NOT dischargeable, so if these are the debts that are inspiring you to file for bankruptcy, Chapter 7  will not help you as much as you are hoping for. Nondischargeable debts include: Secured debts like mortgages and auto loans, some income taxes, spousal and child support, and student loans unless there is a showing of extreme hardship.

Chapter 13

Overview: This is reorganization bankruptcy. It for debtors who are behind in paying their debts.They want to save their assets, such as their home, and have enough disposable income to establish a repayment plan.

When you file your Chapter 13 bankruptcy petition, you present the court with a proposed repayment plan. The court will consider the type of debts you have, the property you own and your income. You will need to earn enough money to keep current on the secured loans you have as well as the payment arrangement made for the arrearages on other loans.

Benefits: You are allowed to lump all your back payments together and pay them over a period of time, usually three to five years. At the end of that time, if you have followed all the requirements and made all your payments, the debts that remain will be discharged.

Drawbacks:  It takes three to five years to complete. Any missed payments may result in your case being dismissed with no debts being discharged and you will be back to square one.

Social Share
  • google-share

Contact Us Today!

Proud Member of

National Association of Consumer Bankruptcy Attorneys

Recent News Items

How Filing for Bankruptcy Improves One's Credit Score
May 06, 2019
Should My Business File for Bankruptcy?
Apr 09, 2019
Can the Bank Seize My Account Deposit to Pay Overdue Credit Cards?
Apr 03, 2019

Contact Us Today

Questions? Please give us a call to discuss your specific issues. The first consultation is always free!

Phone: (818) 501-5055
Fax: (818) 501-5849
Email: info@topgunbankruptcylawyer.com
Skype: Chat with Steve Burton

Locations

16133 Ventura Boulevard, 7th Floor
Encino, CA 91436

15260 Ventura Boulevard #1200
Sherman Oaks, CA 91403

4647 Long Beach Boulevard
Long Beach, CA 90805

Attorney Stephen L. Burton

Steve Burton Stephen Burton has served as an attorney for bankruptcy trustees, taught bankruptcy at the National Business Institute and practiced before the bankruptcy courts. He regularly attends continuing education classes. As a consequence, virtually every case he files is successful. Read More...
Copyright © Stephen L. Burton, Attorney At Law | Disclaimer & Privacy
Site managed by Axsen