Chapter 7 versus Chapter 13 Bankruptcy Filing
When it comes to getting out of debt there are many options at your disposal. With that said, however, the choice is often made to file for bankruptcy. Although a bankruptcy filing is seen as a last ditch effort by many, it can often be the best course of action for those that have little in terms of assets or even for those that wish to protect the valuable assets that they do have from the liquidation process. If you know anything at all about the process itself, you're probably aware that there are two types of personal bankruptcy protection that are most commonly sought – Chapter 7 and Chapter 13. For those that are unsure regarding the type of protection to seek, the following article will list the fact as they pertain to each type so that you can make a better determination.
If you find yourself pondering the differences between Chapter 7 and Chapter 13 then you're not alone. In fact, most people wrongly assume that there is some sort of mystical formula that the courts use to place you into one category or the other, though this simply isn't the case. Chances are that you've heard an awful lot about Chapter 7, which makes sense when you consider that it is the most popular option. Chapter 7 protection is made for people that don't have much to lose in the way of assets. You see, during the bankruptcy process, your non-exempt assets are liquidated to cash in order to pay back your creditors. If you choose to file Chapter 7 then chances are good that your valuable assets are minimal and that you just want a "fresh start."
On the other hand, Chapter 13 bankruptcy protection is a bit different and is designed for individuals that don't want to put their valuable assets at risk. This form of bankruptcy is also known as "reorganization bankruptcy" because it essentially involves the initiation of a payment plan. The plan is mandated by the courts and usually involves a consolidation of the outstanding debt that is owed. The period for repayment is typically 3-5 years, during which the debtor's assets remain safe from liquidation.
As you can see, there really is no mystery to discerning the differences between the two most common forms of bankruptcy. Because this article is only meant to provide you with a basic overview, we also recommend that you seek the advice of a qualified bankruptcy attorney who can help you further. An attorney can explain how to go about filing for bankruptcy in detail and can even help you to fill out the claim forms.
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