Frequently Asked Questions About Chapters 7 And 13 Bankruptcy
Frankfort Law Group in Will County, Illinois, has helped many individuals, couples and businesses find debt relief through bankruptcy. This page addresses common questions people ask about the two most popular types of bankruptcy: Chapter 7 (debt discharge) bankruptcy and Chapter 13 (debt reorganization) bankruptcy.
What Are Some Benefits Of Each Of The Two Most Common Types Of Bankruptcy: Chapter 7 And Chapter 13?
Chapter 7 is generally quicker, and it may allow you to have all your debts discharged. It is generally less expensive, too, but the entire attorney’s fees must be paid upfront. Chapter 13 takes a few years to complete, but you don’t need to pay for the whole bankruptcy upfront. Your legal fees will be part of your affordable monthly payments over three to five years.
In spite of the longer term and higher fees, Chapter 13 is ideal for many people who need to stop foreclosure. They may have substantial equity in their homes and want to keep their homes. Others are paying off car loans and want to keep their car(s). Chapter 13 bankruptcy can also help manage repayment of debts that cannot be discharged in bankruptcy, like taxes, student loans and child support. Chapter 7 does not touch those types of debts at all (in most cases).
What Determines If I Am Eligible To File Chapter 7 Bankruptcy?
Eligibility for Chapter 7 bankruptcy is based on the gross amount of income earned by all members of your household, your ability to repay your debts, the value of any real estate you own and the value of your personal property. A required means test before you start will determine whether you qualify.
What Determines If I Need To File For Chapter 13 Bankruptcy Instead Of Chapter 7?
The court may require you to file for Chapter 13 bankruptcy rather than Chapter 7 if your income is greater than the median income for a family of your size in your area.
Additionally, you may choose to file Chapter 13 bankruptcy if you have substantial home equity and are behind on house payments and want to keep the house. The same may apply if you are behind on car payments for a car that represents a substantial investment. If you have the ability to repay the past due amounts in affordable payments at little or no interest over three to five years, Chapter 13 bankruptcy may be the form of debt relief that will meet your needs.
How Often Can I File For Chapter 7 Bankruptcy?
A more important question is how to avoid falling into unmanageable debt a second or third time. However, if you do need this type of debt relief again, bankruptcy may be an option again. An individual can file a Chapter 7 bankruptcy every eight years dating from the filing of the previous case.
How Often Can I File For Chapter 13 Bankruptcy, And Can I File For More Than One Kind Of Bankruptcy?
About filing repeat Chapter 13 bankruptcies: Generally, you can file for Chapter 13 bankruptcy almost immediately after completing a previous Chapter 13 bankruptcy. So the two filings will be about three to five years apart.
As for filing two kinds of bankruptcy: An individual can file a Chapter 13 bankruptcy (including slow repayment of secured debts like mortgages) any time after the filing of a Chapter 7 bankruptcy (which can wipe out most or all unsecured debt like credit card accounts and medical bills). Some people refer to this strategy of filing Chapter 7 and Chapter 13 one after the other as “Chapter 20” – not an actual form of bankruptcy, but an informal description of this sequence of Chapter 7 plus 13.
Note that an individual filing a Chapter 7 and then a Chapter 13 would not be eligible for the Chapter 13 discharge until four years after the filing of a petition for Chapter 7 bankruptcy if the individual received a Chapter 7 discharge.
Where Can I Get More Information About Chapter 7, Chapter 13 And Other Bankruptcy Topics?
Please refer to our other two pages on this topic: Bankruptcy Law and Bankruptcy FAQ. Also, feel free to contact us at your earliest convenience by phone at 708-349-9333 or through this website. Frankfort Law Group is here for you.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.