Bankruptcy – What Most Common Chapters Entail

Filing for bankruptcy is often thought of as an extreme measure. But truth be told, sometimes it is the only way out. People are afraid of bankruptcy claims due to the many myths surrounding it, but you should know better: bear in mind that myths are just myths. The best way to fight this sometimes irrational fear of bankruptcy filing is knowledge. By becoming knowledgeable on everything bankruptcy related, you will get to know what it actually entails and how you will benefit from it.I have decided to put together an easy guide to the two most common bankruptcy chapters, which are Chapter Seven and Chapter Thirteen. Of course these are not the only ones, but indeed the most popular ones, so to speak. Read on to find out more about them!Chapter SevenThis Chapter is the most common chapter there is, when people refer to bankruptcy, the often refer to Chapter Seven bankruptcy. The filer will give the bankruptcy trustee all non-exempt property, which will be turned into money. This money will be used to pay off creditors. As you can see, it is a liquidation procedure.This type of claim is usually discharged within four to six months after filing. Almost 100% of bankruptcy claims are discharged with all debts being written off. Most debtors own only exempt property, so the objects which can be taken are limited.How often can this Chapter be filed? It is not wise to use bankruptcy claims as a way of getting rid of debts. Chapter Seven can be files once every eight years.How much does it cost to file a Chapter Seven claim? Well, it costs around $300 just to file the claim. On top of that, you will have lawyer fees. They charge anywhere between $1000 and $2000. Filing for Chapter Seven is not cheap, but it will provide you with a fresh start free from creditor’s harassment.Chapter ThirteenThis chapter is also referred to as a reorganization bankruptcy. When a debtor files for this specific chapter, it is because he usually has non-exempt assets he wants to keep. When filing for this chapter, it is expected for debt to be completely paid off after between three to five years.A Chapter Thirteen filer should have a steady income which is high enough to both pay monthly expenses and repay a monthly sum of money related to his or her debt. Under the new law, a Chapter Thirteen bankruptcy claim may only be filed in case the debtor has received a discharge under chapters 7, 11, 12 over four years ago, and under a Chapter 13 over two years ago.Why do people choose Chapter Thirteen over Chapter Seven? There might be a number of reasons, for example, the first chapter allows the debtor to make up for missed payments while the second one does not. Also, when a person has a large amount of non-exempt property he does not want to lose, filing for Chapter Thirteen is usually the best way to go as he might end up losing some of his non-exempt assets with a Chapter Seven claim. Debtors who have a tax consisting debt usually choose Chapter Thirteen over all the other chapters.

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