Needless to say, filing for chapter 7 bankruptcy when unsecured debt becomes overwhelming has become the only feasible option. In fact when am individual pays the minimum on large credit card balances it will simply take years for reducing the principal amount. And to top it, if that person either loses his job, or accrues huge medical bills, the situation becomes all the more difficult, somewhat insurmountable. And then the debtor is left with two choices; Filing Bankruptcy under Chapter 7 or under Chapter 13. So, which option is the best? There is hardly any one line answer to this and all is required is your through idea about bankruptcy Massachusetts.
First things first - it is wise and certainly important to consult with a Lawyers for Bankruptcy or the debt relief attorney to see which path you qualify for. As a matter of fact the size and the scope of your debt determine what you are eligible for.
About the Chapter 7 bankruptcy:-
• Mainly used when the debtor has little personal property and in fact no liquid assets
• The debtor has little money left over after paying only his basic living expenses
• Most unsecured debts (except student loan backed by the government) can be covered under Chapter 7 Bankruptcy and can be fully discharged
• The debtor can keep their furniture, car and any other items that are necessary for a normal life
• He may be able to keep their home or stay in it longer
• Filing for bankruptcy under chapter 7 is a fast moving process and debts can be completely discharged after only a short period of time
• Harassing phone calls end
About Chapter 13 bankruptcy:-
• The debtor has significant equity in their home and wishes to keep it
• They are able to pay their living expenses however not being able to keep up with the scheduled payments of their other debts
• He is allowed to keep their home and personal property while the debts are spread out and dispersed to creditors by a trustee or administrator.
• Generally the debts are allowed to be paid off over a three- to five-year
• During the extended payback period, a single monthly payment is made to the trustee
• The creditors are restricted from any communication with the debtor
Well, both these bankruptcy help stays on a person's credit report for a period of seven to ten years. Well, although this may seem like a long time to carry around a negative mark on the credit history; however, if you consider the alternative – the debtor with a $25,000 credit card balance, paying the minimum payments will take at least 10 long years or more to pay it down and will probably miss payments along the way. Trust me “Bankruptcy” is not a bad way to go. The person who files either chapter has a fresh start. The Chapter 7 file has an immediate reprieve and the Chapter 13 file has a restructured payment plan, but both are able to start rebuilding their credit immediately.
For both the Chapter 7 and Chapter 13, an experienced counseling Bankruptcy Lawyers can determine who is qualified, however, the basic guidelines are:
For Chapter 7: - The debtor must qualify through a means test which determines their income to debt ratio
The debtor should seek qualified credit counseling prior to bankruptcy filing
For Chapter 13 bankruptcy: - The debit whose unsecured debts is less than $360,475.00 and secured debts less than $1,081,400.00 is qualified.
This content has been taken from: http://www.zimbio.com/Bankruptcy+Service/articles/wggxZGWkDbw/Chapter+7+bankruptcy+better+Chapter+13+bankruptcy?add=True
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