The United States Bankruptcy Code consists of many chapters that outline how insolvency is to be handled. For consumers, the most commonly filed chapters are 7 and 13 as they are both geared for people as opposed to businesses. But how do you know which chapter you are supposed to file under? There is a general rule of thumb for each, but you are best served by talking to a Bankruptcy Lawyer in Washington County. You may have circumstances that make filing under one chapter a better idea than the other.
When you file for bankruptcy, you are expected to repay your creditors in one way or another. To that end, you either liquidate your assets or set up a repayment plan that lasts for up to five years.
Chapter 7 is about liquidation of assets to generate money to repay creditors. However, if you don’t have assets to sell, you are not excluded from filing for bankruptcy. The law recognizes that people need to eliminate debt regardless of the assets they do or don’t own. Sometimes, you may own items that the court feels is more hassle to sell than it is worth. When you file under this chapter, you are done in a few months after filing, and can move on without worrying about your debts. It’s best to discuss the possibility of filing for Chapter 7 Bankruptcy Lawyer in Washington County to understand how it all works, and if you are eligible to file.
Chapter 13 is for those who have assets and an income that is over the state’s median income. This chapter works on the principle of reorganizing debts, determining the petitioners monthly costs of living, and how much money from the income can be devoted towards paying those reorganized debts. All creditors have the option to accept the plan, or attempt to renegotiate the terms until something can be agreed upon. In this particular chapter, the lawyer plays the role of negotiator between you, the court and your creditors to achieve a satisfactory agreement.