Differences between Chapters of Bankruptcy
Bankruptcy is designed to give those who find themselves facing far more debt than they can handle a financial escape route. The laws, however, are complex, and the requirements are exacting. Additionally, there are different forms of bankruptcy to be considered. An experienced Columbia, SC bankruptcy lawyer can help you explore your options and determine the best path forward for you.
Chapter 13 Bankruptcy
The two primary options for individuals considering bankruptcy are Chapter 13 and Chapter 7. Chapter 13 is called Adjustment of Debts of an Individual with Regular income, and it applies to those who have considerable debt but also have a regular income. Chapter 13 affords debtors the benefit of retaining their valuable assets, such as their homes, when they carefully adhere to the repayment plan agreed to.
The Chapter 13 discharge is, in general, broader than it would be under Chapter 7. This means that, by implementing a payment plan, you are likely to eliminate more debt under Chapter 13 than you could immediately discharge under Chapter 7.
The Proposed Payment Plan
With a Chapter 13 bankruptcy, you – under the guidance of your savvy bankruptcy attorney – will propose a plan to repay your creditors over time, which generally means from three to five years. Your payment plan will be based on your anticipated income over the designated period.
The Confirmation Hearing
Your proposed payment plan will proceed to a confirmation hearing. If your proposal meets the requirements for confirmation set by the Bankruptcy Code, the court will approve your repayment proposal.
You will make your payments through a trustee. Under Chapter 13, your debt will not be discharged immediately. Instead, you will need to successfully complete your payment plan before receiving a financial discharge. While your plan is in effect, you’re protected from garnishments, lawsuits, and any other creditor actions.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation process that is guided by the supervision of the court. In order to be approved for Chapter 7 bankruptcy, you will need to meet the government’s means test, which sets specific asset thresholds for relief under this form of bankruptcy. Those whose means exceed the set limits do not qualify but can consider Chapter 13 instead.
Often, chapter 7 bankruptcies involve few nonexempt assets, which means that actual liquidation is not required, and the term no-asset cases applies. While not all debts are dischargeable, those that are can be discharged relatively quickly in a chapter 7 case – rather than over the course of a repayment plan.
An Experienced Columbia, SC, Bankruptcy Attorney Can Help
The accomplished Columbia, SC, bankruptcy lawyers at Reed Law Firm appreciate how challenging living with immense debt can be, and we dedicate our imposing practice to helping valued clients like you find financial relief. Your case is important to your future, so please don’t wait to contact us online or call 803-726-4888 for more information about what we can do to help you today.
