The different chapters of bankruptcy are designed to meet the various needs of petitioners. Chapter 7 is generally used for those who don’t have enough income to protect assets in a Chapter 13, or simply don’t have much in the way of assets or income. Chapter 13 is for those who have a high income and a lot of assets they want to retain. A Chapter 20, although not officially called that, is a combination of both chapters of bankruptcy, and each achieves what the other chapter does not. Some will benefit from filing both chapters if their financial situation warrants it.
A majority of consumer bankruptcies are filed under either Chapter 7 or 13, with an occasional filing under Chapter 11. Sometimes a situation makes it necessary to file what is known as a Chapter 20, a combination of Chapters 13 and 7. What chapter makes the most sense greatly depends on the needs of the individual. Sometimes, one chapter or the other gets the job done, but there are situations where filing both chapters, one after the other, is more beneficial. This is why it is important to speak with bankruptcy attorneys in Marion before starting out with bankruptcy.
On the flip side, someone with a lot of income, but has a lot of assets and debt, is best served by filing for Chapter 13. This chapter creates a repayment plan that lasts anywhere from 36 to 60 months. While it seems like a long time to be in bankruptcy, it does have the effect of reorganizing and paying down debt. If all of the payments were paid on time and no problems arose, the remaining balances are discharged on the set date.
Someone who has a low income but a lot of debt, whether it be a mortgage, car note, credit cards or a combination of those and more, is best served with filing Chapter 7. The chances are good that there is no way the debt load is going to be repaid in a reasonable amount of time, and clearing the slate all at once is preferable. If there are assets of value, they may be taken by the court for sale, but this is not always a sure thing. It’s best to discuss this with one of the many bankruptcy attorneys Marion IN, such as one from Sitename.