For individuals, there are two common types of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. We discussed Chapter 7 bankruptcy in a previous post, but as a quick refresher, Chapter 7 bankruptcy is a liquidation bankruptcy that will allow a person to eliminate most of their unsecured debt such as credit cards, medical bills, and personal loans.
On the other hand, a Chapter 13 bankruptcy is a repayment plan. People who file Chapter 13 bankruptcy are often behind on their house or car payments and want to keep their house or car.
As mentioned in the Chapter 7 bankruptcy post, some individuals may be required to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy if their income exceeds the amount allowed by federal bankruptcy laws. You would need to visit our office for more detailed information on this bankruptcy law requirement.
In Chapter 13 bankruptcy, the repayment plan usually lasts 3-5 years, and monthly payments are made to the Bankruptcy Trustee. In order to file a Chapter 13, however, you must show sufficient income to make your monthly payments to the Trustee as well as provide for your family as you normally would.
We encourage you to contact our offices for a free consultation to learn more about how bankruptcy can help you eliminate your debts.