GETTING OUT OF DEBT - BANKRUPTCY & DEBT CONSOLIDATION SOLUTIONS
Getting out of debt using bankruptcy can be a difficult step to take. Your credit card debts can seem overwhelming. Don't let debts ruin your life. Consider the debt consolidation and bankruptcy solutions we offer.
This chart is designed to help you learn more about getting out of debt, especially credit card debts, through the use of either a Chapter 13 debt consolidation plan or a Chapter 7 bankruptcy. Our comparison chart lets you see how your choice between Chapter 7 bankruptcy and Chapter 13 debt consolidation will affect your life.
Chapter 7 bankruptcy and Chapter 13 debt consolidation are evaluated side by side based on the most common questions ask by clients. Eliminate credit card debts with Chapter 7 or control your debts in a Chapter 13 bankruptcy debt consolidation plan.
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QUESTIONS
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CHAPTER 7
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CHAPTER 13
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| Qualification to file a case: |
Individuals, married couples, corporations or partnerships |
Married or unmarried Individuals owing not more than $307,675 of unsecured debt and not more than $922,975 of secured debt. No partnerships or corporations allowed. |
| Advantages of Chapter 7 Bankruptcy & Chapter 13 Bankruptcy: |
Will stop foreclosure until discharge if significant equity. Stops all collection actions like law suits, wage garnishment, reposession, creditor harassment & tax levies. Used for getting out of debt. Eliminate debts that are unsecured like credit card debts, personal loans, store cards, medical bills & deficiency judgments after a car reposession and sale. Also eliminates debt that is secured with possessions like furniture, homes & vehicle loans if you give up the secured item. Does not eliminate debts for most taxes, student loans, family support obligations or debts from fraud, intentional injuries or damages for driving under the influence of drugs or alcohol. |
Will stop foreclosure and all activity where creditors are trying to take your money or assets while you are in a Chapter 13 debt consolidation /reorganization plan. This protection can last as long as 5 years if needed. This allows you to set up a debt management plan where you keep all your assets and pays off all foreclosure arrears & all secured debt on vehicles furniture, appliances. Then it pays all priority debt like taxes. Finally it pays nothing to 100% of unsecured debts like credit card debts with no interest. When you complete your Chapter 13 bankruptcy you will normally be debt free except your home mortgage. Even debts that creditors claim were incurred by fraud are discharged. |
| Method to accomplish goals: |
Liquidation of property not protected by exemptions and discharge of unsecured debts. |
Monthly plan payments to a trustee followed by a discharge of the debtor when the plan is completed. |
| Length of time in bankruptcy: |
Typically 3 to 4 months from filing to discharge. |
From 36 months minimum (unless all debt to be paid through plan including 100% to unsecured creditors has been paid) to 60 months maximum. |
| Creditors get paid if: |
There are non-exempt assets. |
Some debt (but not necessarily all debts) will be paid through the plan. |
| Source for payment to creditors: |
Distribution of funds obtained by converting non-exempt assets into cash. |
Distribution of net income of debtor during the plan, after deducting living expenses. Sometimes a sale or refinance of assets may also be used. |
| How will available funds if any, be distributed to creditors and in what order: |
Priority unsecured claims (typically taxes) will be paid first. Any remaining funds will be paid pro rata (i.e. same percentage paid) to all general unsecured creditors. |
Priority unsecured claims (taxes) paid at least 100%. General unsecured claims paid as you can afford, but no less than they would get in Chapter 7. Secured claims arrears paid on long term debt. Secured claims that become due in full within the plan length are paid in full. Secured get interest. |
Please recognize that these are general statements to which there are many exceptions too complicated to explain here. It should not be construed or relied upon as legal advice or analysis and is used solely at the reader’s risk.
This Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy comparison chart was prepared by Gary Ray Fraley, Esq. , founder & owner of California Bankruptcy Attorneys January 13, 2003. Updated June 12, 2004 ©2003-2004
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