Differences Between Chapter 7 and Chapter 13 Bankruptcy_5911

Differences Between Chapter 7 and Chapter 13 Bankruptcy You should always first consult an Arizona bankruptcy lawyer to get a thorough analysis of the type of bankruptcy filing that is most appropriate for your situation.Chapter 7 The most common personal bankruptcy is a Chapter 7. In a nutshell, a Chapter 7 filing allows canada goose jakke the debtor to discharge most debts, such as LV outlet credit card balenciaga online bills and health care charges. A Chapter 7 is streamlined, procedurally simple, and the least costly. Your average basic "no-asset" bankruptcy will cost a debtor canada goose jacket anywhere from $1,200 canada goose coat - $2,000 in legal fees for Louis Vuitton Outlet Online Store an experienced Arizona bankruptcy lawyer (which admittedly is not cheap for most people in financial distress). More complicated bankruptcies cost more. In addition, a Chapter 7 will relieve the debtor from most liabilities. For example, if an Arizona foreclosure occurs on a debtor's home, a Chapter 7 will prevent most junior home equity lenders from suing the debtor for any deficiency amount owed. As a side note, so long as the debtor's mortgage was used to purchase the house , the mortgage lender is usually prohibited from suing the debtor for any deficiency amount, even without a bankruptcy filing (assuming that the Arizona "anti-deficiency statute" applies) . Always consult with an Arizona real estate lawyer Louis Vuitton Women to determine whether your mortgage lender can sue you for any deficiency amount if a foreclosure has occurred or is pending. In return for the debtor receiving a discharge of most debt, the bankruptcy trustee may require the debtor to turn over certain "non-exempt" assets. Most debtors primarily own "exempt" assets -- property that is protected and can be retained by the debtor (i.e., a home with $150,000 of equity or less, a car with $5,000 of equity or less, a pension/401(k)/IRA, most furnishings, etc.). To the extent that a bankruptcy trustee requires a debtor to relinquish non-exempt assets (i.e., money in a bank account exceeding $150, a boat, valuable electronic equipment, etc.), such assets will be liquidated, and any cash proceeds will Burberry Outlet Store be used to pay the debtor's creditors. Chapter 13 So why don't all debtors file for a Chapter 7? Well, if a debtor earns too much money, the debtor may not qualify for Chapter 7. In such circumstances, a debtor may file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy is what I call a "payment plan" bankruptcy. A debtor makes monthly payments to the bankruptcy trustee over the course of 3 - 5 years. Once all payments have been completed, most debts are discharged. How much does a debtor have to pay each month? That is always the $25,000 question (after the question "how much is your legal fee?"). In a nutshell, a debtor's monthly payment will be the debtor's monthly take-home pay minus the debtor's "reasonable monthly expenses". A competent Arizona bankruptcy lawyer will be able to assess your income and expenses and help estimate what your monthly payment will be. Unlike a Chapter 7 bankruptcy, a Chapter 13 bankruptcy may also be used to help a debtor come current with missed mortgage payments without penalties Burberry Outlet Store or interest being assessed (assuming the debtor wants to keep the home and is able to afford an adequate monthly payment to make up missed mortgage payments). Although a bankruptcy filing usually cannot compel a lender to modify its loan for a debtor's primary residence, a debtor may be able to use a Chapter 13 bankruptcy to completely strip away junior mortgages , depending on the value of the home in today's market. A Chapter 13 can also be used to pay vehicle loans and other debts secured by personal property, possibly reducing the remaining principal on such loans and requiring the lender to accept a better interest rate. A competent Arizona bankruptcy lawyer will try to get the debtor's payments to pay those secured debts that the debtor wants to be paid (i.e., a vehicle loan so the debtor can retain the vehicle), providing the most "bang for the debtor's buck". It is not uncommon that the monthly Chapter 13 payment will pay just a small fraction of unsecured credit card debt. Once payments have been completed, the debtor will have paid 100% of missed mortgage payments and car loans, and most debts will be discharged. Louis Vuitton Shoes Furthermore, a debtor will most likely be able to keep property that would otherwise be "non-exempt" and would have to be surrendered in a Chapter 7. Unfortunately, more than 60% of Chapter 13 bankruptcies fail for one reason: the debtor stops making the monthly payments. For more information on bankruptcy and other legal issues, visit http://scotthyderlaw.com