Is it Better to File Bankruptcy Chapter 7 or Chapter 13?
It is essential to keep in mind that different types of bankruptcy are suited for different filers, depending on their resources, obligations, and short- and long-term goals. Seeking legal advice early on is advisable as you look closely into your financial problems and work towards making a decision that will rebuild your financial future.
A successful bankruptcy filing under Chapter 7 can wipe out different types of debt. This means that a debtor will no longer need to repay debts that they owe from creditors. Alternatively, a Chapter 13 bankruptcy declaration can help you pay back what you owe to lenders while keeping your assets. If you plan to file for bankruptcy, seek legal aid right away.
A competent and compassionate Portland OR bankruptcy attorney can explain the pros and cons of your legal options and explain how you can pay off your debts. Our legal team at Northwest Debt Relief Law Firm can help you through the entire bankruptcy process.
Liquidate non-exempt assets or submit a payment plan
In a Chapter 7 case, the assigned trustee in bankruptcy filings is in charge of liquidating assets and distributing funds accordingly. That is, unless it is a ‘no asset’ case. Proceeds from the liquidation are to be used to settle certain debts.
On the other hand, in a Chapter 13 petition in bankruptcy, the filer must submit a debt repayment plan that will run for three to five years. This must be approved by the bankruptcy court, and it must be proven that the filer has the means to make the monthly payments.
Have certain types of debts settled
A debt is considered unsecured if there is no collateral involved. Conversely, a secured debt<span style=”font-weight: 400;”> involves a property, such as a house or a car, as collateral. Under relevant bankruptcy laws, creditors can repossess property and assets to settle secured debts. To avoid foreclosure or repossession, one must allocate enough funds to repay owed debts to particular lenders.
Complete the required financial management course
Completing a financial education course from a certified credit counseling organization is necessary before obtaining a bankruptcy discharge.
Obtain a bankruptcy discharge
If applicable, the court order for discharged debts is usually given out around three to six months after filing bankruptcy. Here, all qualifying debts are forgiven or wiped out.
Looking at Filing for Bankruptcy under Chapter 7
A liquidation bankruptcy petition is especially useful in eliminating unsecured debt. Under the bankruptcy code, unsecured debts generally pertain to debts without any collateral. These may include credit card bills, medical bills, and personal debts. However, certain types of debt do not involve collateral but are considered non-dischargeable. Typical examples include particular tax debt, criminal fines and penalties, child support, alimony, and student loan debt.
Passing the bankruptcy means test<span style=”font-weight: 400;”>, which takes into account monthly income and living expenses, among other things
Not having a recently filed Chapter 7 or Chapter 13 petition in bankruptcy
not having filed a previous bankruptcy petition that has been denied due to non-compliance with a bankruptcy court order or failure to appear in court
Filers must keep in mind that failure to provide all the required paperwork and supporting documents may result in the early dismissal of a bankruptcy case. Additionally, court forms and documentation related to one’s debts, personal property, and finances must be complete and comply with relevant bankruptcy rules.
A Chapter 13, or what is referred to as a wage earner bankruptcy, is generally helpful if you are a high-income earner who wants to reorganize your debts. Bankrupt individuals who are filing Chapter 13 bankruptcy cases must have a steady monthly income to repay their debts. In this type of bankruptcy, you can keep all of your properties and assets, but you must pay back your creditors for non-exempt assets through a debt repayment plan. Such a payment plan will run for three to five years.
If you are planning to declare bankruptcy under Chapter 13, you would generally go through the following steps:
Consult with a credit counselor to discuss finances and debt reorganization plans with a local attorney, who shall help you document your eligibility.
Submit your proposed payment plan 14 days after filing the petition and work on making payments within 30 days from filing, even before it has been approved by the bankruptcy court.
Go through the confirmation hearing and complete the required debtor education course.
A Chapter 13 bankruptcy case will involve numerous paperwork and supporting documents. These would include court forms and documentation that must be complete and comply with relevant bankruptcy rules. Experienced and hands-on Portland, Oregon bankruptcy lawyers can explain the process and advantages of a bankruptcy declaration in more detail.
Why Individuals Who are Struggling Financially Consider Bankruptcy
In general, a Chapter 7 liquidation, for example, is generally ideal for those dealing with credit card bills, medical bills, and personal loans. A Chapter 13 reorganization, on the other hand, is often apt for those with assets that they would want to keep.
Filing for bankruptcy allows you to have a clean slate in terms of your finances. It enabled a lot of individuals to have a fresh start in life after bankruptcy. However, it is essential to seek legal help from a trusted Oregon bankruptcy lawyer before filing bankruptcy.
If you are struggling financially primarily due to unsecured debts, such as medical debt and credit card debt, a Chapter 7 filing is likely an ideal bankruptcy option. On the other hand, a Chapter 13 bankruptcy case is ideal for filers who own many properties that would likely be considered as non-exempt assets.
The Need for Legal Services of a Reliable Local Attorney
If you are currently encountering grave financial difficulties, it is best to seek legal advice early on. Consider all of your options, including negotiating directly with the debt collector or creditor or filing for bankruptcy.
If you are planning to file bankruptcy, or are wondering if it is the best course of action to take, you need a lawyer who can help you solve your financial problems.
For individuals who are struggling financially because of unemployment, growing medical expenses, credit card debt, marital issues, or other reasons, filing for bankruptcy may be their only choice. Here, a competent Portland bankruptcy law firm can help. Consult with a dedicated Oregon bankruptcy lawyer at Northwest Debt Relief Law Firm today.