Tuesday, September 18, 2012

Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 7 vs. Chapter 13 Bankruptcy
September 17, 2012 by King and King Bankruptcy Attorneys

The two most commonly used types of bankruptcy are called Chapter7 bankruptcy and Chapter 13 bankruptcy. The one that you will file depends on your situation. The first is Chapter 7 bankruptcy.
In Chapter 7 bankruptcy, any unexempt property will be liquidated and turned over to a trustee. The trustee converts it to cash and then pays your creditors.  Do not worry—exemptions are generous and we are able to protect all of our clients’ property in almost every case.

You will most likely be advised to file Chapter 7 bankruptcy if you do not have enough disposable income to pay your obligations via a payment plan or if you are unemployed.

Chapter 7 Bankruptcy Advantages
Chapter 7 bankruptcy is a straightforward process. After the liquidation process, the trustee is expected to process your discharge from debt. After the discharge, your creditors do not have any claim on your future earnings or properties and possessions, so you truly get a fresh start.

Credit Impact
Chapter 7 bankruptcy’s major credit impact is that it lowers your credit score, and it stays in your record for up to 10 years. However, you should be able to rebuild your credit immediately after discharge and in most cases have a credit score higher than before bankruptcy within just a few years.

Chapter 13 Bankruptcy:

This type of bankruptcy is available to individuals with disposable income. With a Chapter 13 bankruptcy, your creditors will work with your bankruptcy attorney, your Chapter 13 Trustee, and the Bankruptcy Court to restructure your debt and create a repayment plan. These payments can last 3 to 5 years, depending on the agreed plan.

Chapter 13 Bankruptcy Advantages
The biggest advantage of Chapter 13 is that you get to keep your assets, including properties. This can also be done with Chapter 7 using exemptions.  Chapter 13 can also stop the foreclosure on your home, repossession of your car, wage garnishment, and it gives you more time to pay off your debt.

It is best to consult a bankruptcy attorney before deciding which type of bankruptcy is the best option for you. Call King and KingBankruptcy Attorneys in Atlanta, Georgia for a free consultation today, 404-524-6400.