One particular question that the majority of consumers deliberating on filing for consumer bankruptcy in Cook County, Illinois frequently will wish to ask a Chicago bankruptcy lawyer is: “What’s the distinction between Chapter Thirteen and Chapter 7?” While Chapter Seven is basically a “liquidation” – the use of your present interest in property to pay back your lenders – Chapter Thirteen bankruptcy is designed to provide you an opportunity to reorganize your fiscal state of affairs in a way which will let you pay some or all of your debts while using the money you make in the future. Although a lot of assets can be shielded from being sold pay off creditors in Chapter Seven , if ever the value of your interest in any asset exceeds the federal or state exemption amount, that property may be sold with the proceeds applied toward your debts.
Possessions are not liquidated in a Chapter 13 bankruptcy. Rather, you may retain and still use all your possessions irrespective of whether it is covered with an exemption. Your obligations are paid back by way of a repayment plan that has been accepted by the bankruptcy court. When you complete the plan, you will get a discharge like the discharge in a Chapter 7.
There can be exceptions to your Chapter 13 bankruptcy discharge. By way of example, long lasting obligations with last installments owed after the plan is completed which are “cured” in the plan aren’t discharged. A variety of tax debts are not discharged. Neither are debts incurred by means of fraud, ones not listed in the bankruptcy, most student education loans, or drunk driving debts along with other criminal fines or civil penalties.
Whether or not a discharge can not always be granted in your specific circumstance, there are occasions when it could be in your best interest regardless. Even though a discharge is unavailable under Chapter Thirteen, if you are behind on your mortgage loan and at risk of losing the house to the lender, Chapter 13 Bankruptcy can allow you to prevent a foreclosure and get caught up with your mortgage payments through the plan.
A lot of people today believe that in the event that they have to file for bankruptcy that they will lose every little thing they’ve got. This, however, is not the truth. While both Chapter 7 and Chapter 13 have their own advantages,Chapter 13 bankruptcy is most often the preferred chapter for those wishing to save their homes from foreclosure.
Chicago bankruptcy attorney, and author of Chicagoland Bankruptcy Help, John Kunes works hard to be the bankruptcy attorney Chicago can depend on.