What Are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?

What is Bankruptcy?
Filing a bankruptcy petition is the declaration of one's inability to pay back loans or debts. It's also a plea to the bankruptcy court for legal assistance and protection. Bankruptcy is found right in our Constitution, and after dealing with Great Britain's oppression and debtor's prisons, bankruptcy still exists today to provide Americans a "Fresh Start."
There are now various different forms of bankruptcy designed to be used in a variety of situations. These different forms of bankruptcy are referred to as "chapters" after different-numbered chapters found in the statutes of the bankruptcy laws. Some of the most frequently filed forms of bankruptcy include Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 can be filed by individuals. Under this chapter, a person's assets over a certain amount are sold and the money raised by the sale is used to pay back creditors. But, in exchange for selling excess assets, Chapter 7 Bankruptcy generally wipes clean a person's credit slate. Usually, the goal is to get a Fresh Start and possibly an opportunity to rebuild responsible credit. However, a notation may stay on the person's credit for about ten years. So, reestablishing credit should always take a second or more distant seat when considering bankruptcy. The promise of Bankruptcy is not to get new credit, but to relieve oneself of the crushing stress of old credit.
What is Chapter 13 Bankruptcy?
Chapter 13 is another popular form of bankruptcy. Individuals are able to retain most if not all of their assets while their debts are adjusted to affordable repayment levels. It is important that individuals who need to file a Chapter 13 Bankruptcy have a fixed and steady income with which to affordably repay debts. Filers will have a period of time to affordably repay their debts and get their finances under control. For most individuals, the time permitted to repay is three or five years. Chapter 13 Bankruptcy is complex, and an experienced bankruptcy attorney can help make the determination.
What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?
Both forms can be filed by individuals, and they will both have a negative impact on future ability to obtain credit; however, there are some key differences to be aware. The main differences are the control of property and assets and the length of time for court involvement. Under Chapter 7 Bankruptcy, individuals give up their rights to excess property and assets and can get out of bankruptcy quickly. In a Chapter 13 filing, the individual will generally get to keep control of his or her property, but be under court supervision for a longer period of time. Additionally, the individual will work with the court to propose an affordable repayment plans in which to pay debts over time. The quicker and decisive fashion of Chapter 7, sometimes called Straight Bankruptcy, and the more controlled but longer periods of court involvement are the main differences between these two popular forms of bankruptcy.

ExperTrans language - multilingual services
ExperTrans voice-overs services
ExperTrans interpreting translation services

Your Second Mortgage in Chapter 13 Bankruptcy

Let's be honest, this economy sucks. Ever since the financial collapse in 2008, it has been very difficult for a great many people. For many, the biggest problem is unemployment. Most people are 90 days away from filing bankruptcy because we require income to survive. Many people, most of whom never even considered bankruptcy, now must face a stiff choice.
If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.
Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.
You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.
So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.
The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.
For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.
All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.
Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.

ExperTrans language - multilingual services
ExperTrans voice-overs services
ExperTrans interpreting translation services

What Is the Chapter 13 Repayment Plan?

Repayment Plans in Chapter 13 Bankruptcies
Chapter 13 is a specific type of bankruptcy that allows debtors to propose a plan for paying off their debts. This type of bankruptcy is best for those who have enough income to create a debt Repayment Plan. If a bankruptcy petitioner does not make enough income, or if the income is irregular, the court may not approve a Chapter 13 bankruptcy. Chapter 13 benefits debtors because they can keep personal property under the terms of an accepted Repayment Plan. It can be the most important component of a Chapter 13 bankruptcy.
Repayment Plan Terms
When someone files for bankruptcy, a Repayment Plan must be filed within 15 days of the filing of the bankruptcy petition. The Plan provides for regular fixed payments to a bankruptcy trustee, who then distributes the payments to creditors. Claims are given one of three statuses. Priority claims are debts given special treatment under bankruptcy law. Priority claims must be paid off in full unless the creditor agrees to a different payment arrangement. Secured claims are debts that have been secured by collateral. Unsecured claims are debts that have not been secured by collateral.
Secured and Unsecured Claims
Chapter 13 allows petitioners to keep certain property as long as they are making payments. Under this type of Repayment Plan, the bankruptcy petitioner must pay the creditor at least the value of the property. In some cases, these payments are made on the original loan repayment schedule. Unsecured debts do not have to be paid in full, but each creditor needs to receive as much as they would have received if the petitioner filed a Chapter 7 bankruptcy and liquidated his or her assets. Under a Chapter 13 Repayment Plan, a petitioner must pay all of his or her disposable income toward unsecured debts over a certain period of time. Disposable income is any income that is left over after all necessary and reasonable expenses have been paid. Necessary expenses include food, shelter, utilities, and child support payments.
Creditor Meeting and Confirmation Hearing
The 341 Meeting gives creditors an opportunity to protest, dispute, or seek changes to the details of the bankruptcy and/or the proposed Repayment Plan. The 341 Meeting typically involves the bankruptcy petitioner, his or her lawyer, a bankruptcy trustee, and representatives of creditors (not common). No more than 45 days following the 341 meeting, the bankruptcy judge holds a confirmation hearing. During this hearing, the judge decides whether the Plan meets legal standards and is feasible based on the petitioner's financial status. Creditors receive a notice of this hearing 25 days before it occurs. This will afford creditors a chance to object to confirmation of the Plan. If the judge confirms the Plan, the monthly payments received will be distributed to creditors by a Chapter 13 trustee. If the it is not confirmed, the petitioner may choose to convert the case to a Chapter 7 bankruptcy or to file a modified Chapter 13 Repayment Plan.

ExperTrans language - multilingual services
ExperTrans voice-overs services
ExperTrans interpreting translation services

Your Second Mortgage in Chapter 13 Bankruptcy

Let's be honest, this economy sucks. Ever since the financial collapse in 2008, it has been very difficult for a great many people. For many, the biggest problem is unemployment. Most people are 90 days away from filing bankruptcy because we require income to survive. Many people, most of whom never even considered bankruptcy, now must face a stiff choice.

If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.

Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.

You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.

So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.

The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.

For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.

All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.

Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.

ExperTrans language - multilingual services
ExperTrans voice-overs services
ExperTrans interpreting translation services

What Is the Chapter 13 Repayment Plan?

Repayment Plans in Chapter 13 Bankruptcies

Chapter 13 is a specific type of bankruptcy that allows debtors to propose a plan for paying off their debts. This type of bankruptcy is best for those who have enough income to create a debt Repayment Plan. If a bankruptcy petitioner does not make enough income, or if the income is irregular, the court may not approve a Chapter 13 bankruptcy. Chapter 13 benefits debtors because they can keep personal property under the terms of an accepted Repayment Plan. It can be the most important component of a Chapter 13 bankruptcy.

Repayment Plan Terms

When someone files for bankruptcy, a Repayment Plan must be filed within 15 days of the filing of the bankruptcy petition. The Plan provides for regular fixed payments to a bankruptcy trustee, who then distributes the payments to creditors. Claims are given one of three statuses. Priority claims are debts given special treatment under bankruptcy law. Priority claims must be paid off in full unless the creditor agrees to a different payment arrangement. Secured claims are debts that have been secured by collateral. Unsecured claims are debts that have not been secured by collateral.

Secured and Unsecured Claims

Chapter 13 allows petitioners to keep certain property as long as they are making payments. Under this type of Repayment Plan, the bankruptcy petitioner must pay the creditor at least the value of the property. In some cases, these payments are made on the original loan repayment schedule. Unsecured debts do not have to be paid in full, but each creditor needs to receive as much as they would have received if the petitioner filed a Chapter 7 bankruptcy and liquidated his or her assets. Under a Chapter 13 Repayment Plan, a petitioner must pay all of his or her disposable income toward unsecured debts over a certain period of time. Disposable income is any income that is left over after all necessary and reasonable expenses have been paid. Necessary expenses include food, shelter, utilities, and child support payments.

Creditor Meeting and Confirmation Hearing

The 341 Meeting gives creditors an opportunity to protest, dispute, or seek changes to the details of the bankruptcy and/or the proposed Repayment Plan. The 341 Meeting typically involves the bankruptcy petitioner, his or her lawyer, a bankruptcy trustee, and representatives of creditors (not common). No more than 45 days following the 341 meeting, the bankruptcy judge holds a confirmation hearing. During this hearing, the judge decides whether the Plan meets legal standards and is feasible based on the petitioner's financial status. Creditors receive a notice of this hearing 25 days before it occurs. This will afford creditors a chance to object to confirmation of the Plan. If the judge confirms the Plan, the monthly payments received will be distributed to creditors by a Chapter 13 trustee. If the it is not confirmed, the petitioner may choose to convert the case to a Chapter 7 bankruptcy or to file a modified Chapter 13 Repayment Plan.

ExperTrans language - multilingual services
ExperTrans voice-overs services
ExperTrans interpreting translation services