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A Chapter 7 Bankruptcy is a way for a
person or married couple to file a petition in Federal District Court to allow
them to discharge their debts. In 90% of the cases they are able to retain all
of their property including a house, car or furniture.
A chapter 13 case is termed a
"wage earner" plan. This type of bankruptcy is usually filed in three
different scenarios.
First- a debtor may have too many
assets to allow them to exempt all of their assets in a straight Chapter 7
Bankruptcy.
Second- a debtor may have too great an
income as compared to monthly expenditures; therefore his disposable income is
too large to allow the trustee to approve a Chapter 7 Bankruptcy.
Third- a Chapter 13 is usually used
where a Debtor has a loss of a job and has fallen in arrears on the mortgage
payments of his home. If he later becomes gainfully employed and now has a
sufficient income to make his normal monthly mortgage payment, the court will
allow him to cure his arrearages within a reasonable period of time-typically 24
to 30 months and a Chapter 13 case is recommended.
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