The main difference between Chapter 7 and Chapter 13 bankruptcies is that Chapter 7 involves liquidating assets in exchange for debt forgiveness while Chapter 13 involves filing a repayment plan to creditors. When you talk to a local Montgomery bankruptcy lawyer, they can help you decide which bankruptcy is best to file.
Chapter 7 bankruptcy applies to individuals and businesses wanting to have their debts discharged, or forgiven. To qualify for this type of bankruptcy, individuals must pass a Means Test which determines whether or not they are eligible based on their income. If granted approval, the debtor’s non-exempt assets will be sold and the proceeds used to pay back creditors as much as possible before any remaining debt is discharged. A Chapter 7 bankruptcy in Shelby County can be a quick and easy way to get out of debt, as long as you qualify and do not have any unexempt assets you could lose.
In comparison, Chapter 13 bankruptcy applies to individuals who are able to make payments towards their debt but need a bit more time or assistance in doing so. This type of bankruptcy filing allows individuals to reorganize their finances in order create a repayment plan that is manageable over an extended period of time – usually anywhere from three to five years depending on individual cases. The payment plan outlines how much should be paid back each month and when these payments should be made – failure to adhere strictly could result in dismissal from this form of protection.
At the end of the repayment period, any remaining balances owed by the debtor are typically discharged; making it an ideal option for individuals wishing to remain in control of their financial situation while still being able to make headway towards becoming debt-free again. If you are interested in filing for a bankruptcy, but are unsure which type, then call our bankruptcy lawyers in Birmingham and let us help.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!