What's the Difference between Chapter 7 and Chapter 13?

If you are thinking of filing for bankruptcy, you probably have several questions. Most people know nothing about tax codes or the bankruptcy process. Maybe, things have been difficult lately and you are just looking into bankruptcy. Maybe, you have been thinking about bankruptcy but all the jargons have you confused and frustrated. You always hope that you won't have to know the answers to the difficult questions about bankruptcy, but certain things that may be out of our control happen. If you are about to call a Baltimore bankruptcy attorney, consider these simple differences between Chapter 7 and Chapter 13 bankruptcy before filing.

 

Repayment

One of the biggest differences between Chapter 7 and Chapter 13 bankruptcy is what you will have to pay back. In Chapter 7 bankruptcy, you will not have to pay back your loans. Instead the bank will repossess some or all of your property (with a few exemptions which will be discussed below). When filing Chapter 13 bankruptcy, you are required to pay back all of your debts. How? With the help of the courts, you will set up a payment system that is possible for you, depending on your income, so that you can repay all of your outstanding debts. Some of your repayment plan could also depend on what type of debts you have and how much you owe.

 

Property Liquidation

As mentioned earlier, when filing for Chapter 7 bankruptcy, the court has the right to seize some of your assets and sell them to repay your debt. As for Chapter 13, there is no property liquidation. Since you are repaying your debts, you are not required to give up property to sell for repayment.

 

Nonetheless, there are some exemptions from property liquidation when filing Chapter 7 bankruptcy. Your retirement plan can often be protected when filing for bankruptcy. If you had a generous salary and a nice retirement plan before your financial troubles, it could be saved from property liquidation. Some states will let you keep the majority of your household goods such as things like furniture, appliances, clothing and some jewelry, assuming that the equity of the jewelry does not exceed a given amount. Your insurance policies are safe from property liquidation; most states will allow you to keep the cash value of your insurance plan. Other things such as equity in your home or tools used in your job could be saved from liquidation. If you work in a field where owning your own tools or equipment is necessary, such as carpentry or plumbing, you may be able to save these from property liquidation.  All of the exemptions mentioned in this paragraph vary by state and specific amounts can even vary by court.

 

These are some of the biggest differences between Chapter 7 and Chapter 13 bankruptcy. If you are in financial trouble and are considering bankruptcy, it would be wise to call a professional Baltimore bankruptcy attorney for more detailed information. They will be able to tell you what would be the best choice for each individual case. If you are continuing to struggle with financial debt and, after reading this article, think that bankruptcy might be the best option for your finances, call a Baltimore bankruptcy lawyer today.

Source : articlesbase.com