Chapter 7 and Chapter 13 Bankruptcies and the Filing Process
If you are at the point where you are drowning in debt or recognize that you can’t dig your way out of debt, bankruptcy may be an option. Bankruptcy is a challenging legal matter, and having knowledgeable legal counsel backing you up is always advised. Taking the first step toward resolving your financial concerns is often the most difficult. Our experienced Columbia bankruptcy attorneys at Reed Law Firm, P.A., are standing by to help.
Bankruptcy for Individuals
There are several types of bankruptcy, but the two primary forms for individuals who are facing crushing debt include Chapter 7 and Chapter 13. Each is distinct and must be considered in the context of the unique circumstances that apply.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often called straight bankruptcy or liquidation bankruptcy. This is the most common form of bankruptcy, and it requires the filer to sell off their assets in order to repay their creditors.
When Chapter 7 Is Likely to Apply
Chapter 7 is generally a better option for those who earn below the median income for South Carolina or who pass what is called the means test. This form of bankruptcy is the most straightforward, and these cases are generally resolved more quickly. Often, those who file Chapter 7 bankruptcy have no assets beyond the basics, which means that no property is seized.
The Filing Process
There are several important steps that must be followed for Chapter 7 bankruptcy, including:
- Completing a credit counseling course from an approved agency
- Filing the necessary Chapter 7 bankruptcy forms with the court and the bankruptcy trustee
- Attending the 341 meeting, or the meeting of creditors, to address questions about your personal finances under oath
- Completing a debtor education course that establishes eligibility for discharge
- Receiving discharge, if approved, which includes identification of those debts that were discharged
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is best suited for individuals who earn or receive a regular income. In these cases, assets aren’t liquidated. Instead, filers are allowed to repay their creditors over time and to retain their assets in the process.
Pros and Cons
With Chapter 13 bankruptcy, debtors can avoid foreclosure and aren’t required to liquidate their assets. Further, some unsecured debt may be discharged once the repayment plan is successfully completed. In other words, Chapter 13 can provide you with a much-needed financial do-over.
It’s also important to keep in mind, however, that the process can last up to five years. Additionally, failure to abide by the repayment plan can lead to dismissal or conversion of the case to Chapter 7.
The Filing Process
The filing process for Chapter 13 includes the same steps as Chapter 7, but there are additional requirements. These focus on filing a repayment plan, making initial payments, gaining confirmation of the payment plan, and completing the payments, which discharges the remaining debt.
Our Experienced Columbia Bankruptcy Lawyers Can Help
Our accomplished bankruptcy attorneys at Reed Law Firm, P.A., are proud to serve Columbia and the surrounding area, and we have the legal skill, experience, and drive to help you address your debt concerns head-on. Learn more about everything we can do to help by contacting us online or giving our firm a call at 803-726-4888 today.
