Declaring bankruptcy has long-term financial and credit repercussions. If you are one of the many individuals laid off from work, or if you are a businessman who has no chance of regaining your company, bankruptcy is your final resort.
Since Chapter 7 and Chapter 13 bankruptcy are two very distinct legal choices with different possible outcomes, both may assist creditors in debt beyond their means.
What Is the Bankruptcy Process?
When your debts surpass your income, you may file for bankruptcy to have them cleared or reduced. It should be regarded as a last resort when all other options have been tried.
Most customers will file for Chapter 13 or Chapter 7 bankruptcy, depending on their assets and capital goals.
Things You Should Know About Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 Bankruptcy
A legal alternative that may assist you in repaying part or the whole of your debt. However, doing so will require surrendering assets such as property or money.
Structure of Bankruptcy: Liquidation.
Qualification:
- Your income, expenses, and dependents must pass the means test.
- A previous Chapter 7 or Chapter 13 discharge within the past eight years is also prohibited.
- Refusal to appear in court or comply with court instructions are reasons for abandoning a bankruptcy petition.
Pros
It is one of the most expedient methods of resolving unmanageable debt.
Creditor collection activities and legal action are halted when there’s a filed bankruptcy petition.
Cons
Although it is uncommon, the trustee has the authority to sell the nonexempt property.
It only applies to unsecured loans; does not protect against foreclosure or repossession.
Chapter 13 Bankruptcy
It is another legal option that may help you nullify some debt while retaining your assets and repaying your debt over three to five years.
Structure of Bankruptcy: Reorganization.
Qualification:
- Total debt is $419,275 for unsecured and $1,257,850 for secured.
- You must have a stable salary and be up to date on your taxes.
- You cannot have filed Chapter 13 or Chapter 7 in the past two years.
- For example, if you failed to exhibit or comply with court rules, you cannot submit these two chapters (13 and 7) within 180 days.
Pros
In some instances, it may help you get caught up on your secured obligations like a car loan or mortgage while still resolving your problems in other ways.
Creditors’ collection activities and legal action are halted when a bankruptcy petition is filed.
Cons
Many filers find it challenging to afford the repayment plan because of its duration and expense.
Which is More Beneficial, Chapter 13 or Chapter 7?
Your financial situation and long-term goals will determine the best sort of bankruptcy for you. Consult a bankruptcy expert to determine if Chapter 7 or Chapter 13 is best for you.
Before you file for bankruptcy, be sure you can meet your commitments and benefit from the fresh start it affords. In most cases, clients choose Chapter 7 bankruptcy over Chapter 13. Chapter 13 bankruptcy may benefit people who do not qualify for Chapter 7 bankruptcy due to high income.
The post Can I Keep My Cash In A Chapter 7 Or Chapter 13 Bankruptcy? appeared first on .
