Nobody likes to experience financial difficulties, but most individuals face some form of financial problem at some point in their life. Some common indications of debt problems include frequent harassment from creditors and letters threatening wage garnishments. Filing for bankruptcy can bring relief from creditor phone calls and debt collection efforts. However, filing for bankruptcy without hiring a proficient bankruptcy lawyer can be a costly mistake. The bankruptcy process can be long and complicated, especially if the applicant does not have an in-depth understanding of the law. An experienced bankruptcy attorney knows all rules and regulations involved when filing a bankruptcy case. They can examine the applicant’s financial situation and advise them on all the options available to them. Here are some important details to know about chapter 13 and chapter 7 bankruptcies.
Benefits of Chapter 13 Bankruptcy
Chapter 13 bankruptcy is suitable for debtors with a regular income, but who require more time to repay their debts. It allows the applicant to pay off part or all their debts over a period of three to five years. The debtor is allowed to pay off their unsecured debts interest-free and keep their properties. Since all debts are consolidated into a single payment to a bankruptcy trustee, the borrower can significantly lower their monthly payments.
Benefits of Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as liquidation or straight bankruptcy, since all the borrower’s assets are sold to pay the creditors. This form of bankruptcy allows the debtor to eliminate all their unsecured debts and start over with a clean slate. However, the borrower is allowed to retain exempt properties under the federal law, such as appliances, furniture and clothes. In addition, home owners are allowed to retain part of their home equity, and wage garnishment is also halted.
A competent bankruptcy lawyer can offer valuable advice regarding filing for any form bankruptcy. They can evaluate the borrower’s financial conditions, and help them choose the right form of bankruptcy.
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