Good Reasons To Use Chapter 13 Bankruptcy Instead Of Chapter 7 Bankruptcy
When you have determined that you absolutely need to file bankruptcy, a lot of individuals are not informed of the several options out there. Chapter 13 Bankruptcy and Chapter 7 Bankruptcy are the forms of bankruptcy selected most all too often by individuals. One can find several similarities, but also some people differences between these forms of bankruptcy. These are some people suggestions to help you decide which form of bankruptcy to file. Take into accout that this will not substitute the direction of a Los Angeles bankruptcy attorney. Chapter 13 is all too often selected because a person did not qualify for chapter 7, but you can find some people useful benefits for many in particular situations including those with a foreclosure, reposession, second mortgage.
A chapter 7 bankruptcy can be described as liquidation case that permits a person to strip away most of their unsecured debt. In this system, the bankruptcy trustee is likely to liquidate most of the debtor’s nonexempt property to repay these creditors. Exempt property is normally all of the debtors property under $23,000. One can find other exemptions out there that a Los Angeles bankruptcy attorney can help you utilize in order to maximize the amount of property you can keep. The chapter 7 has negligible impact on secured property besides the automatic stay which inturn would stop any attempts to collect from the person including repossessions and foreclosures.
A chapter 13 bankruptcy utilizes an individual’s excess income to develop a payment plan to repay an individual’s creditors over 3 to 5 years. This excess income is set by using the debtor’s income minus expenses paid by the person. Expenses, for calculation purposes, don’t include amounts paid to creditors because these are debts, not expense (except for secured debts, for example a mortgage or car loan). Nonexempt property is likely to increase an individual’s payment amount above this excess income.
Chapter 13 bankruptcy is useful for many who really wish to strip a second mortgage. Where the loan amount of the first mortgage exceeds the market value of the home, the second mortgage can be removed. Since the first mortgage exceeds the market value of the home, there is essentially no collateral backing the second mortgage. In a chapter 13 lien strip the second mortgage is converted from a secured debt into an unsecured debt and the first mortgage is lowered to the market value of the home. In a chapter 13, only secured debts, and particular other debts, have to be paid entirely before a discharge is attained, therefore unsecured creditors is likely to receive either nothing or very little.
Through a foreclosure, a chapter 13 bankruptcy can be advantageous. While a chapter 7 is likely to trigger an automatic stay which inturn halts a foreclosure sale, you may still have to repay most of an individual’s arrearages immediately or they is likely to be able to take an individual’s home at the end of the stay. A chapter 13, on the other hand, is likely to allow you to put the arrearages in an individual’s payment plan and you can be able to keep your home.
Chapter 13 can also help where a motor vehicle, or other collateral is about to be repossessed. Although the automatic stay in chapter 7 bankruptcy can hinder the repossession temporarily, it is normally unhelpful because the person must immediately pay off the arrearages on the loan. In contrast, a person filing a chapter 13 bankruptcy can easily keep the car, and the missed payments become a part of the payment plan which inturn the person pays in addition to his regular car payment.
Chapter 13 is also useful where there has already been a repossession. Filing a chapter 13 forces the lender to return the car or truck to the person with the back payments becoming part of the payment plan and the regular car payment continues to be a separate bill. A Chapter 7 bankruptcy has no impact and the only way to retrieve the car, outside of chapter 13 it is to repay off the entire balance of the car.
Deciding between chapter 13 bankruptcy and chapter 7 bankruptcy can be tough. A Los Angeles bankruptcy attorney can look at an individual’s financial situation and provide you with the information you might need so that you can make the right conclusion. Feel free to contact the Law Offices of Alon Darvish to discover more about an individual’s bankruptcy options. You may reach Mr.Darvish personally at (800)921-6513 or visit his websit at www.BankruptcyLALaw.com
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