Is it Better to File a Chapter 7 Or a Chapter 13 Bankruptcy?
If you’re considering bankruptcy, one question you might ask yourself is, “Is it better to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy?” The answer is usually both. Chapter 7 bankruptcy requires that your monthly income be below the state’s median. This is why it is so popular for people with low incomes. The misconception surrounding Chapter 7 is that you will lose all of your assets if you file this type of bankruptcy. You can keep your house, car and other assets.
Chapter 7 bankruptcy: Disposable Income
The term “disposable Income” refers to the amount of money left after all expenses are paid. It determines whether you can eliminate all your debts through bankruptcy. You can deduct certain costs based on the actual cost or national standards. The amount of disposable income you have and the amount you spend each month will determine whether you are eligible for this relief.
Calculating the debtor’s monthly expenses is how you calculate your disposable income. To be eligible for discharge in a Chapter 7 bankruptcy case the monthly income must exceed $110. Depending on the circumstances, a Chapter 7 trustee will require repayment of 401k loans. It is not necessary for a Chapter 7 bankruptcy to be filed if the monthly income falls below $110.
How to file a Chapter 7 and 13 bankruptcy
Many people are unsure if filing Chapter 7 or Chapter 13 bankruptcy would be the right choice for them. The amount and type of debt owed will play a role in the answer. Chapter 7 bankruptcy addresses the majority of business debts. It’s also possible to keep some of your business assets if you’re unable to pay the full amount of your debt. These situations are usually handled well by Chapter 13 bankruptcy.
To file a bankruptcy petition, you will need to provide a list of documents as well as a repayment proposal. A court-appointed trustee then reviews this proposal and contacts your creditors. You could face setbacks if you make minor mistakes. You don’t have to hire an attorney if you don’t have the finances. Read self-help books or other articles about the subject. While bankruptcy can be a difficult process, it can help you to regain control over your financial future.
Benefits of filing Chapter 7 bankruptcy
There are many benefits to filing Chapter 7 bankruptcy if you have been unable or unwilling to pay your debts. Chapter 7 bankruptcy is affordable and stops all collection actions like repossessions or judgments. After filing bankruptcy, most creditors will cease calling you. They must communicate with your trustee or attorney. A bankruptcy filing can also have a negative effect on your credit score for seven to 10 years. These drawbacks are outweighed by the many benefits of filing bankruptcy.
With a Chapter 7 bankruptcy, most debts will be eliminated. You may be able keep most valuable assets, and unsecured debt worth less than ten thousands dollars. You can also keep utilities on. In general, bankruptcy will resolve your financial problems in three to six months. It will also give you a fresh start and allow you to start a new chapter in your life. In contrast, Chapter 13 bankruptcy focuses on making realistic monthly payments to creditors and will last for five years.