Deciding to make a bankruptcy filing is huge . Your ability to decide which type of bankruptcy to go after can be a very important part of that process . Do you know the difference between Chapter 7 and Chapter 13 ? Read this basic information , then ask a bankruptcy lawyer in Minnesota to help you decide which form of bankruptcy best suits your needs .
The Biggest Difference between Chapter 7 and Chapter 13
By making a filing for Chapter 7 bankruptcy , you are petitioning the courts to erase all of your debts . If you have belongings that are not exempt , that property could be siezed by the court , put up for sale , and any profit would be put towards paying your debts . That is not actually very common , however, because most people making a filing do not own excessive property .
If you file Chapter 13 bankruptcy , you work with the court to come up with a repayment plan designed to cover some of your debt, paid over a specified period of time. Your payment amount may change based on your income , the manor of debt you owe, and how much property you own . You will not have your property siezed when filing Chapter 13 bankruptcy .
How Do You Know Which Type of Bankruptcy is Right for You?
Before the bankruptcy laws were changed , everyone who filed could choose to file either type of bankruptcy . Most people wanted to file for Chapter 7 bankruptcy because, in most cases , it erased all or many of their debts. However, now your income level is the deciding factor for determining if you are able to file Chapter 7. everyone who is considering Chapter 7 are required to participate in a “means” test. This means test determines whether or not your income for the last six months before your filing was above or below the average income in your state for a home of similar size. If your income was low , you will qualify to file Chapter 7 bankruptcy . If it is above the average , you will be required to file for Chapter 13 bankruptcy protection.
Either form of bankruptcy is a serious solution for a tough problem. A Minneapolis bankruptcy lawyer will be the person most qualified to help you decide if it is the right course of action for you and, if so, which type of filing will best suit your personal circumstances . Don’t be afraid to contact an attorney to find out if bankruptcy is a sensible solution to your financial problems.
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