Chapter 7 Bankruptcy
There are several important things to know about Chapter 7 Bankruptcy, which is also sometimes referred to as “liquidation bankruptcy” or “straight bankruptcy.” While this type of bankruptcy will completely cancel most kinds of debt outright, there are certain things that it cannot help with.
Most debts can be eliminated with a Chapter 7 bankruptcy but it may not help with debts such as:
- Most tax debts;
- Support obligations for children and/or spouses;
- Obligations that come from Divorces or Separation Agreements;
- Most student loan debt; and
- Any criminal fines and/or obligations
Also, with this type of bankruptcy, the Bankruptcy Trustee can order you to liquidate any un-exempt types of property in order to pay your debts. These types of property would vary based on your situation. Usually, most of your personal property is exempt from liquidation but if you own property with equity above certain amounts it could potentially be liquidated under this type of bankruptcy.
For more information on this type of bankruptcy click here.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also called a “wage earner’s plan”, can offer you a number of advantages over liquidation under Chapter 7. Most significantly, it can offer you an opportunity to save your home from foreclosure. It can act as a debt consolidation plan under which you would make payments to the Chapter 13 Trustee who then distributes these payments to the creditors named in your Chapter 13 Plan. This plan requires you to make monthly payments over a period of five years in order to pay down your debts.