Pataskala Ohio Attorney Explains the Difference Between a Chapter 7 and Chapter 13 Bankruptcy?
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There are a number of different types of bankruptcy filings, but Chapter 7 and Chapter 13 are known for being the two types of claims that can be filed by an individual. If you are someone who is thinking about filing for bankruptcy, you need to understand the difference between them.
A Chapter 13 bankruptcy allows a person or couple to reorganize their debt. It’s important to realize, however, that the person will be required by the court to make payments on some or all of the claimed debt. These payments can last up to five years. During the repayment period, the person who is filing for bankruptcy must forfeit all of his or her disposable income to the bankruptcy court. The amount of disposable income a person has will be determined by the court.
A Chapter 7 bankruptcy allows a person to get rid of their debts without having to pay back anything. Because of this, many people will obviously try to file for Chapter 7. Recent changes to bankruptcy law, however, have made it so that people with higher levels of income are automatically forced into Chapter 13. The bankruptcy court will review the income of people filing for Chapter 7 and make the determination if they should file for Chapter 13 under this law. Typically, however, a bankruptcy attorney can advise a client if they will need to file Chapter 13 or Chapter 7.
These two types of bankruptcy tend to have slightly different effects on a person’s credit score as well. Because debts in a Chapter 13 are still being paid on, they can stay on a credit report for longer than debts charged off by a Chapter 7. However, the notation a Chapter 13 bankruptcy can stay on a credit report for seven years while a Chapter 7 bankruptcy can stay on a credit report for ten years. Both types of bankruptcy filings will appear on legal records for twenty years.
Because of the effects of both Chapter 7 and 13, these filings should be thought of as a last resort for anyone with debt problems. Filing for bankruptcy, no matter what the method, is not an easy way to get out of debts. It is a process that can take several months, and the results can last for years.
If you suffer from any financial distress contact attorney John I. Peters today at 740-927-3859 for a Free Bankruptcy Consultation!.