Chapter 7 And Chapter 13 Bankruptcy Rules
Bankruptcy is a big step that an individual takes regarding their financial future. It is an option that remains in a person’s credit report for seven to ten years, depending on the route taken.
When you file a Chapter 7 bankruptcy, most of the unsecured debts are written off within ninety days of filing, and the bankruptcy filing stays on your credit report for at least ten years. In addition, although debts are forgiven, you may need to sell some of your property, with the proceeds distributed to your creditors. In some cases, this may mean losing your home if you own it. You may also be a candidate for Chapter 7 filing if you have no assets to lose, such as a house or a car, and if after you pay for your monthly expenses, you have no money left to pay off your debts.
On the other hand, a Chapter 13 filing is a repayment plan where you set up a three- or five-year pay off schedule with your creditors. Chapter 13 bankruptcy remains on your credit report for seven years. In addition, with a Chapter 13 bankruptcy, you get to keep all your property, including your home. Typically a Chapter 13 filing is recommended for debtors who have fallen behind on their payments because of a temporary problems such as a job loss but can get back on track if they are given the time to catch up.
Exactly how much a filer will have to hand over depends on where he or she lives, and for how long. For example, if you have lived in your state for fewer than 730 days, you must abide by the exemption rules of the state where you lived before moving. This requirement was put in place to prevent people from moving to a state that has better exemptions and declaring bankruptcy the following day. In addition, the exemptions for other assets, such as bank and retirement savings accounts, and property, like furniture and clothes, also vary widely.
In addition, both Chapter 7 and Chapter 13 filers will have to take a personal financial management course in order to exit bankruptcy.