When an individual gets to a point where they need to file for bankruptcy, they often look into Chapter 7 bankruptcy discharge. What they don’t realize, though, is that a Chapter 13 bankruptcy attorney in Sacramento can help them financially while allowing them to keep their property. Most people don’t realize that a Chapter 7 discharge can still lead to home foreclosures and other property losses, but this isn’t the case for those who file Chapter 13.
Chapter 7 VS Chapter 13
There are a variety of differences between Chapter 7 and Chapter 13 bankruptcies. First and foremost, a Chapter 7 bankruptcy will get rid of most unsecured debts, but this will include a bankruptcy trustee selling off a person’s nonexempt assets. This money will be used to pay back creditors.
When it comes to Chapter 13 bankruptcy, however, an individual will simply reorganize their debt and make full or partial payments. This is often the only available option for those who have an income higher than their state’s median. This is because, if their income is this high or they can’t pass the “means test”, they are ineligible for filing Chapter 7.
How Chapter 13 Bankruptcy Works
Once Chapter 13 bankruptcy has been filed, the courts will look into a person’s expenses, assets, types of debt, and income. All of this information will be used to set up a monthly repayment plan. These payments will be divided amongst the creditors who are owed money. This also allows a person to make payments on debts that aren’t dischargeable, such as what’s past due on child support or alimony.
Due to the nature of a Chapter 13 filing, a person can actually avoid home foreclosure and auto repossession. This is because an individual is actually making a valid effort to catch up on their debt. Keep in mind, though, that this doesn’t mean a person will be fully responsible for everything they owe. Once their bankruptcy is complete, which could take years of payments, eligible debts will be discharged. So in reality, this has some of the benefits of a Chapter 7 plan with the additional incentive of being able to keep one’s property.
Speak with a bankruptcy attorney today and find out how getting a fresh start is as easy as pressing the restart button! Call now 916-446-1791