Most consumers know the bankruptcy may eliminate some types of debt, but they are not sure what type of bankruptcy to consider. There are two types of consumer bankruptcies. Chapter 7 bankruptcy is a type of personal bankruptcy and may be seized in bankruptcy right. Chapter 13 bankruptcy is another form of personal bankruptcy and is often referred to as the bankruptcy reorganization. Although the objective of both Chapter 7 and Chapter 13 is to help debtors get back on their feet, each type of bankruptcy that performs very differently.
Chapter 7 Bankruptcy: eliminate debt rating
In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that has changed the eligibility criteria of Chapter 7. The biggest change is the result of BAPCPA means test. To qualify for Chapter 7 under the means test, getting a man must be less than the median income of their community. The best way to qualify for Chapter 7 bankruptcy under the means test if your average income over the last six months does not exceed the median for your location. Contact a qualified attorney to determine if you qualify for Chapter 7 bankruptcy.
Chapter 7 is not, however, fulfill the obligation to pay any security. To maintain the property where it is outstanding debt on the property, the applicant must complete the bankruptcy of a reaffirmation agreement. For example, many customers have a car payment and do not want to give up their cars. In reaffirming the debt, they can keep the car but must continue to make payments on the loan after discharge. The same principle applies to real property. Chapter 7 bankruptcy does not eliminate the responsibility to make monthly mortgage payments. However, many individuals can not save their homes by eliminating credit card debt to pay the mortgage payments.
Chapter 13 bankruptcy reorganization debt
Chapter 13 bankruptcy is designed for people with large amounts of debt that do not qualify for Chapter 7. The main characteristic of this type of bankruptcy is Chapter 13 plan. The debtor and his lawyer to prepare a Chapter 13 plan and the administrator and creditors approve the plan. Under the plan, the Chapter 13 debtor must repay a portion of the debt over a period of 3-5 years. During this period, creditors can not contact the debtor or complicated. When a loan is completed, the plan, the court will discharge a part or all of the outstanding debt.
To be eligible for Chapter 13, a person must have unsecured debt below $ 336,900 and secured debt below $ 1,010,650. While Chapter 13 does not eliminate secured debts, such as Chapter 7, there is the added benefit of changing or removal by certain assets safely. For example, if the individual owns a house with a mortgage to both first and second and first mortgage amount exceeds the present value of the house, you can strip the second mortgage. Such a band at one of the characteristics of Chapter 13 to be considered in determining what type of bankruptcy is preferable before the confrontation.
Both forms of bankruptcy Provide Relief
Contact a lawyer to discuss your options and determine which type of bankruptcy, if any, is good for you. If you want to go to http://www. firstsourcelaw. com for a free evaluation of your situation.
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