Unhappily, bankruptcy is quite prevalent, and it is especially prevalent during difficult economic times in which people are losing their employment.
It is a common fallacy that all types of bankruptcy are equivalent. In reality, chapter 7 and chapter 13 bankruptcy are quite distinct, and each has a distinct impact on your financial future.
Filing for chapter 7 bankruptcy signifies that you are in dire financial straits from which there is no escape. Your assets will be liquidated and the proceeds will be used to pay off your debts and negotiate settlements with your creditors, as it is unlikely that they will be repaid in full. Chapter 7 bankruptcy will give you a completely clean slate, but it will remain on your credit report for approximately seven years.
Chapter 13 bankruptcy is commonly filed by businesses that are in financial distress but continue to generate income. Regardless of whether you are an individual or a business, when you file for chapter 13 bankruptcy, you are confident that, with a little assistance, you can emerge from debt. The primary requirement for submitting taxes is continuing to receive a steady income. This funds will be required for debt repayment. You devise a payment plan, obtain court approval, and adhere to it for three to five years. During this period, your payments will accrue no interest and you will not be subject to creditor phone calls or threats.
Chapter 13 bankruptcy remains on your credit report approximately two years less than chapter 7 bankruptcy. This can make a significant difference in regaining your footing.
It is possible to convert your chapter 13 filing to a chapter 7 filing if circumstances prevent you from completing the payments stipulated in your chapter 13 filing. There is also the prospect that your payment schedule could be modified if necessary.
No one should attempt to choose between chapters 7 and 13 on their own. Especially if you lack bankruptcy law education. You must therefore locate a reputable bankruptcy attorney to represent you and guide you through the process. Their expertise will be well worth the cost.""
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