Chapter 7 bankruptcy is different from Chapter 13 bankruptcy. The difference is your income level. In other words, if you don't make enough money or income to qualify for Chapter 13, you will have to file for Chapter 7. Chapter 7 is normally simpler and takes much less time than a Chapter 13 bankruptcy. Hopefully you will be able to qualify for Chapter 7 but speaking to a legal representative who is knowledgeable about this type of transaction will give you an idea of what you are up against.
71 percent of all bankruptcies are Chapter 7, while the remaining 29 percent are Chapter 13. There is a bit of difference between the two. The main difference is the ability you will have to retain your property. In a Chapter 7 case, you will have to return your car and your home to the bank that holds your note for each. If you want to keep them, you must pay the wholesale value of the property, which may be higher than the current cost.
In Chapter 13, arrangements can be made so that you end up with both your car and your home, however, it will cost you. You must keep up with the payments that the court has ordered or risk losing the property.
When you are talking about child support, alimony or student loans, the news is not great. In Chapter 7 and 13, you will owe the original amount during and after the bankruptcy has ended. You cannot avoid these payments.
Knowing what the law says about bankruptcy is so important. You can be sure of your situation and make a better decision about what your next move will be.
Source: FindLaw, "Chappter 7 vs chapter 13 bankruptcy," accessed Sep. 22, 2015
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