Most debtors filing bankruptcy file either a Chapter 7 or Chapter 13. Since these are the two (2) most commonly filed bankruptcies it is important to know which type may be appropriate for you.
A Chapter 7 bankruptcy is generally filed when a person or married couple has a large amount of unsecured debt and no significant equity in a home, vehicle, or other personal property. Typical unsecured debt consists of credit cards and medical bills. If a Chapter 7 is filed it will typically discharge all unsecured debt. When a debtor files a Chapter 7 bankruptcy that person has the option of keeping their home and car simply by signing an agreement and keeping the payments current. The debtor must meet the Chapter 7 exemptions however to retain property.
A Chapter 13 bankruptcy is generally filed when an individual or married couple has significant equity in a home or does not meet the income guidelines for a Chapter 7. A Chapter 13 protects these assets from being seized and sold to pay a creditor. A Chapter 13 can immediately stop foreclosure proceedings however the debtor must have the means to fund or pay the arrearage through the Chapter 13 plan.
A Chapter 13 is superior to “debt relief agencies” that attempt to work out payment arrangements with creditors on the debtor’s behalf. These agencies may not have authority to stop the seizure of assets, no authority to stop monetary penalties from being assessed, and no authority to stop collection agencies from calling.
If you have any questions about Chapter 7 or Chapter 13 bankruptcies, please contact Lee Cossell Kuehn & Love, LLP at (317) 631-5151.
