What Chapter Of Bankruptcy Is More Beneficial? -


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What Chapter Of Bankruptcy Is More Beneficial?

When you are unable to pay all of your bills each month you might consider filing for bankruptcy to get some relief. There are two main types of consumer bankruptcy and each comes with its own advantages and disadvantages. The type of case you file is not entirely up to you, because in 2005 the rules changed and now a strict mathematical computation must be performed to determine what chapter of bankruptcy you are eligible to file. Understanding the difference between the two types of cases will help you to anticipate what to expect during your case, which is beneficial because knowing what to expect helps you stay on track for a successful completion of your case.

The two types of bankruptcy cases can best be summarized as follows:

  • Chapter 7: a Chapter 7 is a liquidation of your debt and lasts about 90-120 days. In a Chapter 7 you will be able to discharge all of your unsecured debt, which for most debtors consists of credit card debt or signature loans. The benefit to not having to pay these debts any longer is that you free up the monthly payments to these lenders. With this extra money every month you will be in a better position to make your house or car payment and might even be able to start a savings account for emergencies.
  • Chapter 13: a Chapter 13 is like a debt consolidation and can last up to five years. In a Chapter 13 you will have to pay back some part of your unsecured debt and the amount you have to pay back depends on the end result of the means test calculation. You will prepare a proposed plan of repayment of your debts, and your creditors will be given the chance to object to your proposal. Once all objections have been resolved, the Court will approve the plan and you will make a monthly plan payment to the Chapter 13 Trustee. The Trustee will then disburse payments to your lenders until the end of your plan term (typically three to five years).

Most people find a Chapter 7 to be more beneficial because it is shorter and does not require you to pay back unsecured debt. But both types of bankruptcies are helpful because in both instances you are protected from collection efforts the minute your case is filed. Let us take a look at your financial picture and tell you what type of bankruptcy you qualify to file. We can help you get your debts cleared up and put you on the road to financial recovery.

For more information about which type of bankruptcy you qualify for and how it will benefit you, contact us at  www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you and your cosigners.

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