Chapter 7 bankruptcy, also known as a ""straight bankruptcy,"" entails the liquidation of non-exempt assets for the benefit of creditors.The majority of chapter 7 cases are considered """"no asset"""" cases, indicating that no assets will be liquidated or distributed to unsecured creditors.Without liquidated assets, creditors are not compensated for their claims.Chapter 7 is typically a three- to four-month process.
A hearing is conducted approximately 30 days after the bankruptcy is filed, during which a trustee asks the debtor specific questions under penalty of perjury to ensure the information is complete and accurate.After the hearing, the trustee provides the court with an update on your case.Assuming there are no problems, the trustee notifies the court that the case is in order and that a discharge can be issued.Once the deadlines for interested parties to object have passed, the court will enter an order discharging your debts and closing the case file.Typically, this occurs between 60 and 80 days after the hearing date.
Chapter 13: Sometimes referred to as a ""wage earner plan,"" chapter 13 involves the consolidation of debts and the gradual repayment of a portion of those debts to unsecured creditors.In general, the repayment period ranges between three and five years.The required repayment amount is calculated using a formula that takes into account your income, current debt, and other variables.Similar to chapter 7 cases, the trustee examines the case and ensures its accuracy at a hearing held approximately 30 days after the filing.
If the trustee has no objections to your case, he will sanction it immediately, and the debtor will simply make the monthly payment according to the terms of the plan.If the trustee objects to any aspect of your case, he will establish a date for a hearing before a bankruptcy judge to address and resolve the issues.However, in practice, the majority of these issues are resolved between the debtor and the trustee prior to the court hearing date.Once all payments have been made in accordance with the court-approved payment plan, a discharge is granted and the remaining debts are eliminated permanently.Before deciding which chapter to file, it is advisable to consult with an experienced bankruptcy attorney.
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