How are Chapter 7 and 13 bankruptcy similar?

Individual bankruptcy processes can be used to help people fix their finances. Chapter 7 and Chapter 13 bankruptcy can improve their situations. Both processes are better suited to help an individual in need of financial help, rather than helping a business to fix their debt. After the paperwork is filed for both processes, an automatic stay goes into effect. With this, individuals do not have to face harassment from creditors any longer. The automatic stay bars creditors from contacting debtors in an attempt to collect compensation. This tool helps individuals focus on their financial planning and avoid the stress of creditors.

What’s involved in Chapter 7 bankruptcy?

To qualify for Chapter 7 bankruptcy, individuals have to undergo credit counseling and attend a debtor education course to prepare. They must pass a means test, which compares their income to the median income in the United States. In order to be eligible to claim bankruptcy, their income has to be below the median income. There have been cases where they can be approved even if their income does not fulfill that standard. Once you have met the eligibility requirements, a petition for bankruptcy must be filled out to be filed and start the process. In this petition, you will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. When the paperwork is filed, the automatic stay goes into effect immediately to aid the debtor during the process.

How does Chapter 13 bankruptcy proceed?

Chapter 13 bankruptcy is very similar to the process that individuals go through for Chapter 7 bankruptcy but eligibility requirements need to be met first. These requirements include credit counseling 180 days before filing for bankruptcy. If you previously filed a petition that was dismissed within that 180 days, you cannot file again. The process can be denied. Once you file for bankruptcy, you should include documents that outline a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication in a rise of income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts.

If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.