There are two basic types of bankruptcy categories that most everyone falls into, your Anchorage Bankruptcy Attorney can help you decide which will best suit your situation and needs. These two types of bankruptcy are called Chapter 7 (liquidated) and Chapter 13 (reorganization). These two while both bankruptcy, are extremely different in what they will allow, cover, and how they work to help you. The ideal situation is one that will help and allow you to eliminate your financial debt, keep your belongings, and start a new life of financial freedom.
What is a Chapter 7 Bankruptcy?
This is also known as liquidation, this can be filed by any person that owns a business or not. Chapter 7 included selling your property, that of which is not exempt under the law, in efforts to pay off your debt as much as you possibly can. There are certain items that are exempt in a Chapter 7 filing, such as your, vehicle, home furnishings, and your personal clothing. Of course, this only works on debts that are unsecured, secured debts that you have placed collateral on will give you a few choices. You could allow repossession of the property, continue to make payments *upon agreement of the lender* under the contract originally signed, or make a lump sum payment that is equal to the amount of the current value of the property.
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It is important to note that not everyone can benefit from filing a Chapter 7, for example, if you have income that allows you to afford payments, after some exemptions, in a chapter 13 filing you will not be allowed to file a Chapter 7.
Ok, so what is a Chapter 13?
This type of bankruptcy filing is also known as reorganization, this will allows you to essentially make a repayment plan with your creditors. You must meet a few criteria in order to quality for this type of filing:
- Obtain reliable monthly income that will allow you to repay parts of your debt
- Secured debts must not be in excess of $922,975
- Unsecured debts must not be in excess of $307,675
Chapter 13 creates a plan that goes into great detail of how you intend to pay back the debt incurred in a period of 3 to 5 years. There are a variety of things that will determine the amount of repayment on a monthly basis:
- Your income earned
- The amount of debt owed
- The dollar amount the creditors would obtain if you were to file a Chapter 7
This type of filing, typically helps those with secured debts, this will allow you to make up payments that you may have missed in order to be able to avoid foreclosure or repossession of the property.
In conclusion
There are many debts that can be included in filing bankruptcy, such as medical bills, credit card debts, and unsecured loans. However, it is important to be aware that not all debts are covered by any type of bankruptcy such as spousal support, child support, and many types of tax debts. It is important that you speak with your Anchorage Bankruptcy Attorney and ask them to explain all of your options in full detail to help you make the decision on if bankruptcy is right for you.
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