Chapter 7 & Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 are the most common bankruptcy options for individuals and business owners in Louisiana and Texas.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also referred to as "liquidation" bankruptcy, helps individuals and business owners eliminate most of their general unsecured debts. When you file for Chapter 7, the trustee (an independent contractor appointed by the court to oversee your bankruptcy case) collects and sells all your non-exempt assets.
Such non-exempt assets that may be sold include second cars, second homes, vacation homes, bank accounts, family heirlooms, bonds, stocks, cash, and other investments. The trustee will pay off some or all your creditors using the proceeds from the sale.
Chapter 13 Bankruptcy
Those who earn a decent income but are overwhelmed with debt may be able to get financial relief through a Chapter 13 bankruptcy. This involves setting up a controlled or structured payment plan to pay down your debt while generally being able to hold on to your car and home.
Under Chapter 13, the individual seeking bankruptcy proposes a repayment plan of 3 to 5 years to the creditor. The repayment plan offers you the chance to pay off part or all of your debts over an extended period using your future income. However, only individuals with a "regular source of income" are able to file for Chapter 13.
Which Bankruptcy Chapter Is Right for You?
If you're thinking about filing bankruptcy, it is important that you take the time to consider which type is right for you. Your assets and income will determine the bankruptcy chapter that you qualify for and will best suit your needs. Things to consider include:
- The Basics - Chapter 7 will eliminate most of your unsecured debt whereas Chapter 13 requires you to repay part or all of your debts.
- Income Requirement and Eligibility - Chapter 7 is available to individuals whose income is less than the state's median income for their household type. If you're a high-income earner, you may not be eligible for Chapter 7. Conversely, there are no income requirements for Chapter 13. Only a regular source of income is required to structure a repayment plan.
- Property - Chapter 7 allows you to keep all your exempt assets while the non-exempt ones will be sold. Under Chapter 13, no property is liquidated.
- Time Frame - Chapter 7 case can be completed within three to four months whereas Chapter 13 repayment plans may last for three to five years
- Complexities in Filing - Filing for Chapter 7 is complicated. It involves preparing several forms and navigating some complex legal legwork while Chapter 13 only requires you to submit a repayment plan to the court.
However, it is vital to understand that every case is different. Therefore, it's important to review your case with an experienced bankruptcy attorney to make the best decision for your unique goals and situation.
Working with Collaborative Legal Counsel
Filing for bankruptcy involves a lot of complexities so navigating the bankruptcy process alone isn't advisable. A knowledgeable bankruptcy attorney can help protect your rights and guide you through the entire bankruptcy filing process.
The Law Office of Robert B. Dunlap is dedicated to providing comprehensive legal services and assist clients through complex bankruptcy proceedings. As your attorney, I will explain your options and help you determine the bankruptcy chapter that fits your needs and unique situation.
As an experienced bankruptcy attorney, I can provide you with the detailed guidance you need, help with documentation and drafting proceedings, and walk you through the entire process. Through my collaborative counsel, I can simplify the bankruptcy process for you and help you achieve the fresh financial start you deserve.