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A chapter 7 bankruptcy is where the Court determines you are completely insolvent--unable to pay for your debts. If you add all income and then subtract all living expenses, and you have a negative or a zero, then you are insolvent. A chapter 13 is a scheduled repayment over a three year period. If you do the same calculations as before but have a number greater than 0, you are required to enter into a payment schedule with the Federal Bankruptcy Court. Over the course of three years, you have to pay the set amount to the court and they divide it to your creditors. At the end of that three years, your debts are cleared, even if the debt to creditors is still outstanding. However, one huge risk to a Chapter 13 is that if you miss your monthly payments to the Court, the Court has the right to nullify your bankruptcy and reinstate all your debts.
Clearly, you should consult an attorney to get more details, but this will cover the basics for you, for your information and education only. Please consult your attorney. That being said...
CHAPTER 7:
In general, a chpt 7 is used for eliminating your unsecured debt (credit cards, unpaid medical bills, etc). You will not pay your secured debt (house, car, boat, etc) through the bankruptcy. You will have a few options as to how to handle these secured debts. They are surrender, reaffirmation, and redemption.
Surrender is just that, you give up the property, and once discharged you are no longer liable for that debt. The creditor may not take up collection actions against you.
Reaffirmation is where you attest that you intent to keep the property, and will
continue to be responsible for it. Once the case is discharged, you will still be help liable for the debt, and if the vehicle is repo'd and sold, you are still responsible for any deficiency balance.
Redemption is a court-sanctioned cash settlement option, normally an appropriate number to offer is the NADA or KBB value of the car. There are companies out there who are in the business of refinancing BK redemptions.
Before 10/17/2005 (the date the new Bankruptcy reform act went into effect, there was an option of retain current in which you intend to keep the car, but if you default an any point in the future and the car is repo'd and sold, you are NOT help responsible for the debt. This is no longer a legal option, but many people still list this intention. Since this is not an acceptable intention, the stay will lift during the bankruptcy, allowing the creditor to take possession of the car if they choose to do so (default in payments).
Once you are discharged from the case, you are done; normally takes 4-6 months.
CHAPTER 13:
In general, a chpt 13 is used to help protect your property from repossession or foreclosure. Normally, a 'dividend to unsecured creditors' will be determined, which can be anywhere between 0% and 100%, depending on your discretionary income after living expenses are accounted for.
Regarding secured claims, there are options on how you pay those debts through the chpt 13, surrender, direct pay, or trustee pay.
Once again, surrender is where you would give up your car in the BK, and upon discharge, you are not responsible for the debt and no collection actions may be taken against you.
Direct pay is where you would continue to pay the debt directly to the creditor, generally in the same way you paid before. If you become delinquent, the creditor must get court order to repossess the car.
Trustee pay is when you pay your BK payment, and out of these funds, the trustee sends the court ordered payment to the creditor. Now, normally, if your car was bought less 910 days before the BK was filed, you must use the full balance owed as the secured amount, although a reduced interest rate may normally be allowed. If, on the other hand, more than 910 days have elapsed since you bought your car, you may use the retail value of the car as the secured amount, and any overage in the debt (if you owe more than the car's value') is treated as if it were an unsecured credit card debt.
Generally, the court will allow time for the trustee and creditors to review and object to your chpt 13 plan, then if there are no objections, the plan is confirmed. This normally takes roughly 6 months, maybe more or less. After confirmation, you make your trustee payments for anywhere from 36 to 60 months, during which time you pay the trustee your BK payment, or it's taken from your paycheck, and the creditors receive payments from the trustee.
After you have completed your payments, the court discharges you from any further responsibilities in the BK.
There are many finer points, so please check with an attorney.
The major difference is Chapter 7 asks the Court to relieve all your debts and you are no longer responsible for any debts filed in that case. The major hiccup, if you will, is if you have any debts that have a lien, or a secured debt, against them, more than likely, will be forfeited. Chapter 13 bankruptcy is set up so you can repay your debts in a monthly payment structure without adding interest to your existing balances. In this chapter, any debt with a lien, or secured debt, will be paid in full. Any unsecured debt is usually repayed in only a small percentage of the total outstanding balance. I hope your just inquisitive and not in a position where you have to choose. In my opinion, Chapter 13 is the "best" choice because it shows future creditors that you acknowledged your shortcomings and attempted to make good on your debts. Chapter 7 completely erases all debt and shows potential creditors you didn't want to make an attempt to repay any debts you claimed in your case. Also, as you can see, Chapter 7 will be discharged a lot sooner than a Chapter 13. The amount of time the bankruptcy stays on your credit report starts from when it's discharged.
Chapter 7 is discharge of all debt. Chapter 11 is the business (or rich individual) version of Ch 13 and allows you to reorganize your debt.
In either case, you should contact an attorney. Business bankruptcy can be challenging.
Speak with an attorney about your specific situation. If you can not find an attorney, contact your local Bar association and they will refer you to one.
Chapter 7 Bankruptcy is when a consumer or business asks the court to discharge the debts owed (some debts cannot be discharged). In exchange, the business's assets or the consumer's property is sold (liquidated) and the proceeds are used to pay off the creditors.
Chapter 13 bankruptcy, or Reorganization bankruptcy involves filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all. The main difference between the two is that chapter 7 discharges most debts while chapter 13 is a type of repayment plan.
In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection.
Chapter 7 bankruptcy is a final liquidation of the company. Assets are sold off to pay debt. Chapter 11 bankruptcy is a rehabilitation bankruptcy. The company (or individual) is given a chance to retain their assets and get their financial status back on firm footing.
Chapter 7 bankruptcy is the most popular and common type of personal bankruptcy.Chapter 13 bankruptcy is the king for protection of real estate and other secured property.Chapter 11 is mostly used by the business who needs to restructure the debts.
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What is chapter 13 bankrupt?
There is a big difference between chapter 7 and chapter 13 bankruptcy. Generally speaking, chapter 13 bankruptcy is a type of Reorganization bankruptcy. It filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all.
If you filed chapter 13 bankruptcy and it was discharged can you file chapter 7 bankruptcy now?
Yes.
How long does it take after a bankruptcy is discharged to show on your credit report?
The amount of time a bankruptcy stays on your credit report after discharge differs between Chapter 7 and Chapter 13 Bankruptcy. With Chapter 7 bankruptcy, the Chapter 7 stays on your credit report for 10 years. Chapter 13 bankruptcy, after discharge, it shows for 7 years on your credit report.
In Kentucky How long after bankruptcy can you file chapter 7 and can you file chapter 13 after chapter 7?
You can file bankruptcy again 7 years after the last time you filed.
What is the bankruptcy differences?
The difference between the types of bankruptcies have mainly to do with whether the filing is for an individual or a business. There are two types of bankruptcy for individuals. Those are Chapter 7-by far the most commonly filed form of bankruptcy and Chapter 13-which is more of a debt consolidation type of bankruptcy. Both have various positives and negatives. The article below goes into the specifics of Chapter 7 vs Chapter 13.
Does a chapter 7 bankruptcy affect your credit the same as a chapter 13?
Yes.
Can you switch a Chapter 13 Bankruptcy to a Chapter 7?
As long as your Lawyer says.
What difference between ch 7 and ch 13 bankruptcies?
Chapter 7 is a complete discharge of all dischargeable debts. Chapter 13 is a repayment plan of the debts under the bankruptcy court's supervision and protection.
Can you file 7 Bankruptcy then 13 Bankruptcy?
Yes, that is what we call a chapter 20 bankruptcy, but they are very complex.
Could you change your chapter 7 to chapter 13 after being discharged?
Sometimes Chapter 13 debtors need or want to convert their bankruptcy case from a Chapter 13 to a Chapter 7 bankruptcy. And sometimes the bankruptcy court will force you to convert from Chapter 13 to Chapter 7 - this is often called a "forced conversion." The reasons for conversions vary. For the most part, if you are instigating the conversion, you have a right to convert your case. But that doesn't always mean you'll qualify for Chapter 7 relief.
How is your credit affected by a chapter 13 bankruptcy verses a chapter 7 bankruptcy?
Both have the same negative impact on your credit.
How does bankruptcy work?
It depends on what chapter you file under. There are separate types of bankruptcy for businesses and for individuals. The two chapters for individuals is chapter 7 and chapter 13. Chapter 7 discharges most debts but has more serious repercussions. Chapter 13 consolidates many debts to make one payment which is much more manageable. The attached article explains bankruptcy and compares chapter 7 and chapter 13.
