Personal Bankruptcy Laws
Best practices filing personal bankruptcy under Chapter 7 & 13 new federal laws
Chapter 7 liquidates debts without payment. Chapter 13 requires repayment of debts, in whole or in part over a term of months. Because of these uniquely exclusive purposes, Chapter 7 laws are quite different than those regulating Chapter 13. The term "straight bankruptcy" is old term which still survives today and is sometimes used to describe filing under Chapter 7. A personal bankruptcy automatic stay applies in both types of cases.
Filing Personal Bankruptcy Under Chapter 7
The primary purpose of Chapter 7 is to eliminate debts. Of course, not everyone is entitled to file and not all debts are wiped out by Chapter 7. This chapter provides that only particular individuals may file, and only particular debts may be discharged. Depending upon each person and the nature of their debts, Chapter 7 is different for each person - i.e. Chapter 7 is an organic concept that may, or may not be your best choice. In practice nevertheless, most individuals do receive a personal bankruptcy discharge without surrendering significant assets. Most often, this favorable result occurs after careful review and planning. If significant assets are subject to seizure, or discharge questionable, you would be well advised to consider another chapter. Anyone considering personal bankruptcy must understand available benefits. Timing counts. Many choices must be made. During the days or weeks before filing, debtors retain flexibility to either influence, enhance or diminish net benefits. Also be aware that common myths and current practices today vary widely. Each state provides property exemptions which range from the threshold of poverty to generous. At a minimum, you must understand the basic operation of law for personal bankruptcy under Chapter 7. For Additional information, see personal bankruptcy under Chapter 7 laws.
Choosing Personal Bankruptcy In Chapter 13
Chapter 13 provides individuals with an opportunity to reorganize debts. Longer payout, discounted payout and court protection through an automatic stay are available. Many code provisions apply to all chapters, while 11 U.S.C. §1301, et seq. applies only to repayment plans. Chapter 13 is designed to provide a cloak of protection through the courts. Under court supervisions, most collection efforts are prohibited while a proposed plan is prepared for court review. All personal bankruptcy laws are currently the topic of hot debate in both houses of Congress, especially payment amounts required for Chapter 13 plans. Also, many people mistakenly believe debtors retain all assets when filing Chapter 13. The law is clear: no plan will be confirmed that provides creditors with less recovery than available if the case was filed under Chapter 7. For Chapter 13 plan confirmation, individuals must maintain a regular income which is why Chapter 13 is sometimes referred to as a "wage earner plan." This chapter is ideally suited for individuals who are employed and desire court protection from creditors. Partial plans are permitted in which the remaining balance owed, when the plan ends, are discharged similar to Chapter 7. For additional information regarding the operation of law, see personal bankruptcy under Chapter 13 laws. Also see personal bankruptcy tips for suggestions dealing with the emotional aspect of filing.