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The Basics: Chapter 7  vs. Chapter 13

Chapter 7?

Chapter 7 bankruptcies are a liquidation of debts.  The bankruptcy court grants a discharge of your dischargeable debts after liquidating any non-exempt assets to pay creditors and otherwise upon successful completion of your chapter 7 bankruptcy.  Chapter 7 bankruptcies only apply to individuals, not corporations or partnerships.

 

Life happens.  Chapter 7 bankruptcies are a relatively short process and can truly offer the fresh start you and your family deserve and need in order to get back on your feet!

 

Chapter 13?

A chapter 13 bankruptcy is a repayment plan generally lasting 3-5 years.  Debtors must have positive disposable income to file a chapter 13; however, chapter 13's also offer additional tools that can help families get back on their feet.  

 

I no longer offer chapter 13 bankruptcy services but I am happy to refer you to someone in our area who does!  

Dischargeable vs. Non-Dischargeable

Dischargeable:

 

  • Credit card debt

  • Medical debt

  • Money/Lawsuit Judgments against you

  • Promissory notes or other personal obligations to pay secured debts

  • Personal loans (i.e. unsecured debts)

  • Most debts arising from a car accident

  • Debt is likely dischargeable if not explicitly non-dischargeable

 

Did you know? 

Some debts otherwise non-dischargeable under a Chapter 7 are dischargeable in a Chapter 13!

 

Non-Dischargeable:

 

  • Student Loans (generally)

  • IRS Taxes and most tax debts

  • Fines, Restitution, or Penalties for breaking the law

  • Government fines or traffic tickets

  • Child Support / Spousal Maintenance

  • Loans opened within 90 days of filing

  • Debts arising from fraud, or willful or malicious acts

  • Debts arising from embezzlement, larceny, or a breach of fiduciary duty

  • Debts or creditors not included in your bankruptcy petition

Other Eligibility Factors

Chapter 7:

 

  • Below current annual median income for your household size

  • The purpose of bankruptcy is to obtain a discharge of debts not restructure them

  • Current on secured loans you intend to retain

  • Qualifying debts are primarily dischargeable

  • May discharge amounts you are personally responsible for after a vehicle(s) is repossessed

 

Chapter 13:

 

  • Mandatory if above current annual median income for your household size

  • The purpose is to restructure a repayment of certain debts (e.g. Past due on mortgage  or car loan; need to save an asset from foreclosure or repossession)

  • Some items that are non-dischargeable in a chapter 7 may be dischargeable in a chapter 13

aboutME&

your experience

Life happens.  Take control.  A bankruptcy might be the smartest & quickest way for you to bounce back and obtain a fresh start.  But truth be told, it may not be! 

 

I promise transparency and compassion.  I want to know your full situation and understand your goals so that you feel confident you're making an informed decision.  This includes possible alternatives to bankruptcy.  For example, if you’re facing foreclosure, or concerned about a single debt or other isolated circumstance, bankruptcy may be one of several options available to you. 

 

Let’s grab a cup of coffee and chat.  Hopefully just meeting and starting the process will relieve some stress.

It's important that you discuss the specifics of your situation with a bankruptcy attorney.

Contact me today for a FREE consultation!

(253) 243-0425

info@jessicaEjohnsonPLLC.com