There are some things that people need to consider when preparing to file for bankruptcy. One of the things will need to be carefully considered is what type of bankruptcy will be best for the situation. For lower income earners, chapter 7 is the best option; however, for people with higher and steady forms of income, chapter 13 bankruptcy may be the only option.
Chapter 7 is the most common, as this bankruptcy typically cancels a great deal of the filers’ debt; nevertheless, certain assets may need to be sold to repay a portion of the debt that has been accumulated. Chapter 13 filings on the other hand won’t require the filer to sell or turn over any property or assets to repay creditors. The reason for this is that chapter 13 is a court-ordered payment plan, which pays back all or a portion of the debts owed by the individual in a span of 3 to 5 years.
The fact is that a chapter 13 bankruptcy is a fairly streamlined process. These are often when a great deal of paperwork will be involved in these bankruptcies; however, that paperwork is mainly geared towards the structuring of a repayment plan. In some cases, the filer will have to meet with various creditors to determine how much of the entire debt will be repaid. Also, the courts will use credit documentation to determine which creditors will be paid first and in full and which ones will have to line up behind the preferred creditors.
If you meet certain income requirements and you want to keep some of your discretionary assets and possessions yet you still need to file for bankruptcy, chapter 13 may be your best option. However, before doing any of this, you may want to schedule a consultation with a bankruptcy attorney.
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