Does anyone else find it just a little ironic that the two most commonly used bankruptcy options are lucky number 7 and the unlucky number 13? You have to wonder just a little bit if that is fates way of trying to send you a little message…
There are actually six different types of bankruptcy which a person or corporation can file: 7, 9, 11, 12, 13, and 15. More often than not most people will just be looking at filing for either 7 or 13. The tricky part can be in figuring out which one is right for you.
The figuring out part is what you pay your lawyer for, but for something like this you are better off having enough knowledge to be considered dangerous- meaning you know enough to pose the right questions to your lawyer and understand what he or she is saying.
Both Chapter 7 and 13 allow you to get rid of your unsecured debt, meaning all those credit cards you have been living off of will be history. A Chapter 7 is a more immediate bankruptcy discharge, while a Chapter 13 will take a few years to complete The trick there is figuring out whether or not you make more or less than the state average income for a family of the same size. If your income is substantially above the median income, you may have some trouble qualifying for a Chapter 7. If, however, your income is more modest, and you simply need to unload your unsecured debt, Chapter 7 might be the best option.
If you do not qualify for 7, Chapter 13 may still be a great option. A Chapter 13 allows you to get caught up on missed mortgage payments, which can help you stay in your home. It also allows you cram down on undersecured car loans, substantially lowering your monthly living expenses. If you have more equity than can be protected under state exemption laws, Chapter 13 lets you keep the non-exempt property (not possible in a Chapter 7). If high income disqualifies you for a Chapter 7, your disposable monthly income will be determined by the bankruptcy code. After crunching the numbers to see how much money you have left after expenses, the court will decide how much you have left to go towards unsecured creditors. Keep in mind, the majority of Chapter 13 filings do not require any repayment of unsecured debt.
It all depends on your unique situation. If you are like I was and drowning in debt without much of anything to show for than Chapter 7 will be the thing for you. Starting over is probably what you need anyway. If you are still treading water, trying to keep up with your secured debt, than you may want to consider filing Chapter 13. This will get you back on track with your mortgage, and may bring your car payments down. A Chapter 13 also gives you breathing room from debts that won't go away, such as non-dischargeable student loans, putting them on hold until you complete your plan period.
Talk to an experienced bankruptcy attorney today to discuss your options. In North Carolina, contact the Law Offices of John T. Orcutt at 1-888-234-4181. Always a free first consultation