If you’re struggling to pay your bills and being hounded by debt collectors in Fairmont, MN, you may be contemplating filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy. Fortunately, the compassionate and knowledgeable team at Behm Law Group, Ltd. can assist you with your decision to file for bankruptcy.
Below is a brief rundown of the differences between Chapter 7 bankruptcy, which is referred to as a liquidation, and Chapter 13 bankruptcy, which is called an adjustment of debts of an individual with regular income or a reorganization.
Your financial situation generally dictates which type of bankruptcy you will file for. Chapter 7 is for people with little or no income, while Chapter 13 is for folks who have a higher and regular income. Reportedly, the most common filing is Chapter 7. Companies, married couples, and individuals are allowed to file Chapter 7. Companies are not allowed to file Chapter 13.
A debtor filing Chapter 7 bankruptcy is essentially scrapping everything and starting over, hoping for a clean financial slate. Once the filing is underway, an administrator or trustee is appointed to manage the sale of the debtor’s assets. This does not mean everything that the person owns is sold. Both state and federal laws allow for certain exemptions, meaning that the debtor might get to keep some property, such as his or her private residence and/or personal items like clothing.
Once the debtor’s assets are liquidated, the trustee pays certain creditors a portion of the money raised. Of course, not all of the creditors receive money from the proceeds, so many of the debtor’s financial obligations are forgiven or discharged. Once a person has filed for bankruptcy under Chapter 7, he or she can’t file again for eight years.
Chapter 13 is a reorganization bankruptcy designed for debtors with regular income who can pay back at least a portion of their debts through a repayment plan. If you make too much money to qualify for Chapter 7 bankruptcy, you may have no choice but to file for Chapter 13. Many debtors choose to file for Chapter 13 because it offers many benefits that Chapter 7 does not. These benefits include the ability to catch up on missed mortgage payments or strip wholly unsecured junior liens from your house.
In Chapter 13 bankruptcy, you get to keep all of your property, including non-exempt assets that you could otherwise lose in a chapter 7 case. In exchange, you must pay back a portion of your debts through a repayment plan. The amount you pay back depends on your income, expenses, and types of debt.
If you think you are a viable candidate for either Chapter 7 or Chapter 13 bankruptcy, give Behm Law Group, Ltd. a call at (507 ) 387-7200. We’re standing by to discuss the intricacies of all four types of bankruptcy (7,11, 12 and 13) and to help you make the best decision for you and your family.