Monday, October 23rd, 2017

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Bankruptcy Management – Chapter 7 or Chapter 13?

Bankruptcy is rated as one of the most stressful life experiences.In the face of overwhelming debts and rising costs, individuals sometimes find that best option may be to file for bankruptcy. Although it sounds to many like the end of the world, the bankruptcy laws in the U.S. allow many individuals and families to file and then move on with their lives.

There are two basic types of bankruptcy filing for individuals: Chapter 7 and Chapter 13. The latter is more inclusive; almost anyone can file for Chapter 13 bankruptcy, provided that they owe no more than $360,475 in unsecured debts and $1,081,400 in secured debts.

Chapter 7 filers, on the other hand, are "means-tested" and have to undergo a counseling session with a credit counselor. Basically, you have to be pretty much broke.

When you file for Chapter 13, you can keep the majority of your property, so home equity or other investments won’t get wiped out. You get a few years of interest-free payments to a single "trustee" which handles distribution to your creditors.

In Chapter 7, much of your property is forfeit – which is why it makes more sense for people who have less to lose.

Whether you fall under Chapter 7 or Chapter 13 filing, it’s also important to find a trusted bankruptcy management service or professional to help guide you through the complex legal pitfalls of the process.

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