Has your debt led you to the point of considering filing for Chapter 7 or Chapter 13 bankruptcy? Before you make a decision, you might want to learn about the difference between the two or what you can do to try to help your financial situation. For many individuals, filing for bankruptcy can provide a way out of debt and a fresh start. Check out this blog post and feel free to contact Palacios Law Group if you need expert legal advice!
Before you file for bankruptcy, you should consider all of your options. You will definitely want to figure out the different types of debt that you have, how much it is in total, and consider how you think filing for bankruptcy will help.
Often times, many creditors are willing to work with debtors to settle the debt. If you can resolve your debt without the need for bankruptcy, then this will be the best solution. No everyone qualifies for bankruptcy. Both Chapter 7 and Chapter 13 have specific requirements. To qualify for Chapter 7 bankruptcy, your income must be low enough. To qualify for Chapter 13 bankruptcy, your debts must not exceed certain dollar limits.
If you are not making the required payments on your debts, your creditors can take you to court to recover the money. When you file for bankruptcy, an automatic stay goes into effect that stops collection actions by creditors. If you are being sued, but file for bankruptcy, this could help put a stop the lawsuit.
If you have debt that is secured by your property (ex: mortgage or car loan) your lender can foreclose your home or repossess your property. In most cases, you cannot wipe out your lender’s lien. Bankruptcy’s automatic stay can stop or delay the foreclosure and repossession process.
Filing for Chapter 13 bankruptcy can allow you to catch up on missed payments, reduce the balance of your loan, and can eliminate unsecured liens from your house through a process called stripping.
Before you file for bankruptcy, you will also want to consider the value of the property you own.
According to NOLO, ” Bankruptcy exemptions allow you to keep a certain amount of property in Chapter 7 bankruptcy. But a Chapter 7 bankruptcy trustee has the authority to sell any assets you can’t exempt to pay back your creditors.
If you file for Chapter 13 bankruptcy, you are allowed to keep all of your property but you will have to pay your unsecured creditors at least an amount equal to the value of your nonexempt assets.
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