The Basic Difference Between Chapter 7 and Chapter 13
The word bankruptcy is reacted to differently by everyone. To some, it is a beacon of hope that means you will never have to pay your bills again. To others, it means that you’ve skirted out of your debts, and has a very negative connotation. If you want to know what bankruptcy really is, ask a Tampa bankruptcy attorney.
The Truth About Chapter 7 and 13 From a Tampa Bankruptcy Attorney
In truth, neither of these presumptions are true. Bankruptcy is an option designed for those who have exceeded their ability to maintain a livable income due to their decision to accumulate debt outside of their ability to pay. When one can no longer survive if they are to continue paying their bills the way that they have arranged to pay them in the past, that is when they seek a Tampa bankruptcy attorney. This is often due to a change in economic position, or due to lenders approving debts that the borrower’s income cannot support. It is many times the only choice, and oftentimes the most responsible one.
There are all types of bankruptcy, but the most common types of bankruptcy that will apply to individuals are Chapter 7 and Chapter 13. Although many people associate bankruptcy with not paying your bills, this is far from true. Even so, there are basic differences between Chapter 7 and Chapter 13 that may explain the root of this myth.
With Chapter 13, you are put on a payment plan that allows you to pay your bills in a manner that is reasonable to your lifestyle and allows you to still survive with basic human needs while paying off your debts. The total is typically adjusted so that you are paying back a reasonable portion of the debt.
Chapter 7 allows you to settle as much as possible of your debts by seizing your nonexempt property. A trustee is designated to determine and carry out this action. If you do not have nonexempt property to sell, the debt is wiped out.
The type of bankruptcy you qualify for depends on how much you make and is handled in the best way possible that will appease the debtors and allow you to continue to live and provide for yourself and your family. Bankruptcy is never a clear-cut abandonment of your debts. No one can wave a magic wand and make your debts disappear. Instead, bankruptcy is an intricate process that can help you to get back on your feet and eliminate debt that you cannot afford.
Source: US Courts