Learning about the intricacies of bankruptcy is certainly not an enjoyable
task, nor is it an easy one. There’s a lot of information out there
to wade through because so many people today are being forced to contemplate
the possibility. To make it a little simpler, let’s pare it down
to the basics.
For most people in financial straits,
Chapter 7 bankruptcy is going to be the most obvious choice. If you or your spouse lost your
job and are unemployed or underemployed, you will more than likely qualify
for Chapter 7 (there’s an income “means” test to qualify
for Chapter 7). After all, how can you repay your debt when you don’t
have sufficient income or assets? This is why Chapter 7 basically wipes
out credit card debt, medical debt, and other unsecured debt that typically
drives people into bankruptcy. There are limits, though—Chapter
7 bankruptcy does not eliminate certain kinds of debt such as taxes, student
loans, and child support obligations. Most people file their Chapter 7
bankruptcy as a “no-asset” case, get their debt discharged,
and start rebuilding their lives.
On the other hand, if you have regular income or you have assets to protect,
but your financial situation has taken a real turn for the worse, then
Chapter 13 bankruptcy might be an option for you. People with regular income might still need
debt relief because they are only able to make payments toward debt they
can reasonably affordable. Chapter 13 offers an important advantage to
those with relatively good incomes: the ability to restructure both secured
and unsecured debts, cure delinquent payments over time, and protect their
assets in the process. Chapter 13 also has special provisions that offer
somewhat broader coverage than Chapter 7 does. For instance, Chapter 13
might protect co-signers and certain marital assets. It might also allow
some relief from debts not otherwise dischargeable in Chapter 7, such
as some lawsuit debts, some tax obligations, and some debts arising from
property settlements in divorce or separation proceedings.
To learn more about which bankruptcy option is right for you, call attorney
Kerry Denton at
Denton Law Group at (619) 458-3739 today.