When a person is contemplating bankruptcy, he or she is often unsure about the difference of Chapter 13 bankruptcy and Chapter 7 bankruptcy. Chapter 13 bankruptcy is the second most filed type of bankruptcy after Chapter 7. One of the differences between Chapter 7 and Chapter 13 is that Chapter 13 does not include liquidation. Under the law, a Chapter 13 debtor may retain ownership of all property as long as his or her plan complies with the bankruptcy law.
The other differences between Chapter 7 and Chapter 13 bankruptcy is that more expenses are involved with a Chapter 13 bankruptcy, and the legal process for a Chapter 13 bankruptcy lasts longer and is more complicated than Chapter 7.
The Time Commitment
Wondering if Chapter 13 bankruptcy help is your best option? You should determine if the amount of time for the entire process fits your needs. A Chapter 7 bankruptcy lasts for a relatively brief amount of time and usually lasts no longer than several months.
A Chapter 13 bankruptcy can last as long as 5 years. Why? Monthly Chapter 13 payments are paid to the trustee for the length of the plan. The plan period may last anywhere from 3 years to 5 years. The time limit for the plan will depend on your income level and if it is considered above or below your state’s median income.
The Payment Plan
A Chapter 13 plan is also known as the payment plan and it is the backbone of how the process works. Chapter 13 helps to reorganize a person’s debt by repaying certain creditors over a length of time. The debtor’s income is analyzed, and the amount of disposable income that is available will be used to make the monthly Chapter 13 plan payments.
A debtor’s Chapter 13 plan must be approved by the court by passing several tests. These tests are:
- The plan must be created in good faith.
- The plan must pass the ‘best interest of creditors’ test.
When you want to receive Chapter 13 bankruptcy help, you should meet with an experienced attorney to discuss your options. The lawyer will assist you in choosing the best decision for your financial situation. If you need Chapter 13 bankruptcy help, contact Douglas Jacobson at 678.341.9114.