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Chapter 7 Bankruptcy

 

Chapter 7 BankruptcyChapter 7 bankruptcy is commonly known as “straight” bankruptcy or “liquidation” bankruptcy.  Chapter 7 bankruptcy is a liquidation proceeding in which a person’s non-exempt assets, if any, are sold by the bankruptcy trustee, the case administrator, and the proceeds distributed to the person’s creditors. People that file a chapter 7 bankruptcy are able to discharge most of their debts in a short period of time.

 

Characteristics of a Chapter 7 Bankruptcy Case:

 

  • Able to discharge most debts you owe.
  • Lasts between 3-5 months and then the court issues you a discharge of your debts.
  • Have to qualify based on income to be eligible to file a chapter 7 case bankruptcy case (means test).
  • Don’t need to have regular income or disposable income.
  • Don’t need to be employed.
  • No debt limit. You are able to file with any amount of debt.
  • There’s a creditors meeting (bankruptcy hearing) 20- 30 days after the case is filed with the bankruptcy trustee assigned to your case.
  • Must complete a credit counseling course and a financial management course.
  • Legal fees are much lower than in a Chapter 13 case.
  • Filing fee is $335.

 

Chapter 13 Bankruptcy

 

A chapter 13 bankruptcy case is a known as a personal reorganization bankruptcy.  It is a payment plan for those with regular disposable monthly income.  In a chapter 13 bankruptcy case, you file a payment plan with the bankruptcy court, in which you promise to use your disposable monthly income to repay a percentage of your debts over a 3-5 year period.  In a chapter 13 proceeding, unlike a chapter 7, you are able to keep your non-exempt property.

Characteristics of a Chapter 13 Bankruptcy case:

 

  • Able to discharge a percentage of each debt you owe.
  • Lasts between 3-5 years, depending on the size of your debts and your income level.
  • You must have regular monthly income, which includes any amount paid to you on a regular basis to cover your household expenses. 11 u.s.c § 101.
  • Debt limit: Less than $383,175.00 of unsecured debts and less than $1,149,525 of secured debts.
  • There’s a creditors meeting (bankruptcy hearing) with the bankruptcy trustee assigned to your case 20 -30 days after the case is filed
  • There’s also a plan confirmation hearing in front of the bankruptcy judge, in which the judge has to approve the payment plan. Interested parties, such as the trustee and creditors, are able to object to the payment plan.  There may be more than one confirmation hearing until all parties agree on a payment plan.
  • Must complete a credit counseling course and a financial management course.
  • Legal fees are much higher than in a Chapter 7 bankruptcy case.
  • Filing fee is $310.

Obtain a consultation from an experienced bankruptcy attorney before you file a bankruptcy case. A bankruptcy attorney will advice you on which type of bankruptcy you should file depending on your individual circumstances.

A Washington D.C. bankruptcy attorney could help you file for bankruptcy and protect your assets.  Ready learn more about the bankruptcy process?  Call 202-445-4775 or contact us for a consultation.