Bankruptcy Attorneys Serving Consumers in Southwest Ohio
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Types of Consumer Bankruptcy Explained
Chapter 7 or Chapter 13—The Differences
Most consumers file one of two types of bankruptcy cases, either a
Chapter 7 case or a Chapter 13 case.
In a Chapter 7 case, the general rule is that you get to keep enough property to make a fresh start in life but the rest of your property is sold to pay off as much of your debt as possible. It is often called a liquidation bankruptcy.
In a Chapter 13 case, the general rule is that you get to keep all of your property but you must repay your debt in monthly payments that stretch out from 3 to 5 years. It is often called a wage earner plan. You make payments until the end of the payment plan and any debt balance that is still owed is wiped out.
There are lots of rules in both kinds of bankruptcy and lots of exceptions to the rules, too. Here are some of the differences between a Chapter 7 case and a Chapter 13 case.
How Long Does It Take?
A Chapter 7 case lasts about 3 to 6 months. A Chapter 13 case last about 3 to 5 years.
Property That Gets Sold
In Chapter 7, some of your property may be sold to pay your creditors. There is a schedule of “exemptions” which describes what you get to keep and you may get to keep everything you want.
In Chapter 13, you get to keep almost all of your property but you have to make monthly payments toward your bills, which are paid through the Court.
Mortgaged Homes, Car Loans, & Secured Debt
In a Chapter 7, you can decide if you want to let the creditor have the property, or continue your payments, or buy the property for a single lump sum payment equal to the current replacement value of the property.
In a Chapter 13, you have the option to make up for missed payments to avoid losing the secured property by including the past due amount in your payment plan. You still have to stay current on the future payments.
The Paperwork Needed
The paperwork needed to file bankruptcy is basically the same for either a Chapter 7 or a Chapter 13 case.
The following is a detailed list of needed documents and information
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all outstanding bills that you have received from everyone you owe
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bank and credit union statements for the last 3 months for every savings and checking account you have
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the last 6 months of pay stubs for each person in your household who works
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if you own any real estate, bring your reas estate deed, your mortgage payment book or a payment coupon, and your signed mortgage paperwork
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you most current credit report from all 3 bureaus (TransUnion, Experian, Equifax)
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all titles (original or memoradnum copy) to any motor vehicles you own; if you have a lease vehicle, bring the lease paperwork you signed.
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the last 6 months of statements for every kind of IRA or other savings or retirement account you have
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any lawsuit papers or letters from a lawyer that you have recieved in the last 6 months
