We have all heard of bankruptcy, and the confusing sounding terms "Chapter 7″ and "Chapter 13″. Seemingly everyone is talking about Chapter 7 or Chapter 13 bankruptcy. What do those terms really mean though? And what is the difference between the two?
Chapter 7 bankruptcy is used more for your classic paycheck to paycheck type worker. Chapter 7 bankruptcy would be used by someone who does not have any real significant assets. That is to say people who don't have many assets beyond the basic day to day necessities. Chapter 7 bankruptcy moves along rather quickly in eliminating your unsecured debt. Also any creditors can contact or harass you once that debt is eliminated. You must pass through some particular requirements in order to qualify to file for Chapter 7 bankruptcy, but most middle and lower class individuals are likely qualified. In short Chapter 7 bankruptcy is the more common type of bankruptcy, and is the one most likely to affect individuals.
As for Chapter 13 bankruptcy, this is used by individuals who do have some significant assets and intend to keep them. People filing Chapter 13 bankruptcy also have regular income that can provide for their necessary expenses. They would file for bankruptcy simply because they are unable to keep up with a their debt payment. Likely their debts have simply spun out of control, or were just too large to begin with in the first place. Chapter 13 bankruptcy does not eliminate your debts, but simply puts forward a 3-5 years schedule for you to pay off your debtors. When examining bankruptcy, it is important to remember that some types of debts (such as student loans) cannot be eliminated via bankruptcy. Both types of bankruptcies help individuals manage or eliminate their debts, and protect them from their creditors.
Contact Steven Peck's Premier Legal toll free at 1.866.999.9085 to talk to an experienced California Bankruptcy Attorney and visit us on-line at www.premierlegal.org.
