In a Chapter 7 Bankruptcy, there is a discharge of most debts. In general, the unsecured debt is discharged and secured debt is either paid or the property is surrendered.
In a Chapter 13 Bankruptcy, a financial plan is created in which you reorganize your debts and pay either all or a portion of this debt. Your income is evaluated and what is determined as your excess disposable income is used to create a payment plan. The plan duration is between three and five years.
The primary advantage of Chapter 13 bankruptcy is that you may be able to keep all or most of your secured assets (house, car, etc.) and discharge some or all of your unsecured debt.
To clarify, the plan payment amount is based on your disposable income and your ability to pay. If you maintain your regularly scheduled payment, at the end of the plan your remaining debts are discharged, and you maintain your secured assets.
A Chapter 13 Bankruptcy is different and more complex than a Chapter 7 Bankruptcy and seen as non ideal for some clients seeking bankruptcy protection, since there is a continuing payment on your debts rather than a total dissolution, as in a Chapter 7 Bankruptcy.
An experienced attorney can help you decide which is the best decision for you. Shuffield Bankruptcy Law has the expertise to guide you through the Chapter 13 process.
We offer free consultations and work with you through every step of the process — from the preparation of a financial plan to the closure of your case. Trust that you will be in good hands.
To schedule your free consultation, call Shuffield Bankruptcy Law at (206) 674-4565.