Bankruptcy Info

Chapter 7 Bankruptcy - Eliminate Debt

Chapter 7 bankruptcy is a process provided for under the United States Federal Law by which you are entitled to a fresh start on your debts. Chapter 7 usually eliminates most kinds of unsecured debt. Some examples of unsecured debt are credit cards, medical bills, personal loans and deficiencies on repossessed vehicles to name a few. As long as your car and mortgage payments are current and there is no significant equity in your property, you are allowed to keep those assets if you desire but must continue to pay on the loan associated with that asset.

In order to be eligible for Chapter 7 bankruptcy, you must demonstrate to the Bankruptcy Court that all of your income goes to service all of your monthly living expenses. Further, there cannot be any extra disposable income above and beyond your cost of living.

Chapter 13 Bankruptcy- Repayment of Debt

Chapter 13 is a process provided under the United States Federal Law by which you are entitled to repay your debt. Under Chapter 13 bankruptcy you can consolidate your debt and make partial or full payments over a three- to five-year period. While in Chapter 13 reorganization, the creditors cannot collect from you, and the creditors are required by a Bankruptcy Court Order to adhere to the terms of the plan.

One very important thing to remember about Chapter 13 is that you must be working or have a regular source of income in order to have a repayment plan approved by the court. Not only must you be able to make your regular monthly living expenses, but you must also be able to make a payment to the court to consolidate your debt. Debts that are generally consolidated in Chapter 13 are mortgage arrears, balances on vehicle loans, student loans, credit cards and other unsecured debts. All outstanding debts must be included in the Chapter 13 consolidation.