Bankruptcy – Chapter 7 and Chapter 13 ANDREW J. LAFAVE, P.A.
Bankruptcy – Chapter 7 and Chapter 13
A business or an individual can declare bankruptcy once they have determined that it has become impossible to pay off creditors. Bankrupty can give you a chance to start over from a financial point of view, as most of debts are relieved after bankruptcy petition has been granted.
Chapter 7 Bankruptcy (often called liquidation bankruptcy) means that your assets are sold (liquidated) in order to pay off your creditors. However, there are assets that are exempt from this requirement. A Chapter 13 (reorganization) bankruptcy can also involve the selling of assets, but more often than not you can retain a majority of your assets while your creditors' needs are determined.
What is Chapter 7 Bankruptcy?
The Chapter 7 Bankruptcy differs from Chapter 13 Bankruptcy because Chapter 7 Bankruptcy does not require debt restructuring nor involves a court approved repayment plan. Under this chapter, the assigned trustee takes stock of the borrower’s non-exempt assets and sells them to pay off the creditors. This may include partial pledging on property assets or even sale of a few approved real estate assets based on individual situation. An attorney will help you determine what assets are exempt, thus not subject to this action by the trustee.
Benefits of Chapter 7 Bankruptcy
In short, Chapter 7 Bankruptcy allows the individual to discharge their debts and fulfill other financial obligations without the risk of losing their personal property based on individual analysis and situation. In most instances, the debtors are allowed to keep most of their prime assets. This form of bankruptcy filing allows debtors and borrowers to start over again with a clean slate, so far as their personal finances are concerned.
What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is an effective tool for debtors to rework their debts and pay them off over a stipulated period of time without the accrued interest, based on the individual’s financial outlook into the future.
Chapter 13 Bankruptcy for Florida home owners facing Foreclosure
When it comes to Foreclosures, homeowners can file for Chapter 7 or Chapter 13 Bankruptcy to initially stop a foreclosure. In Chapter 13, this allows them an opportunity to restructure their mortgage and other pending debts based on court approval which will ultimately reduce the burden on their monthly repayments and improve the overall financial structure. This is a very important option for all homeowners to consider if they wish to keep possession of their homes after missing their mortgage payments. This is subject to their ability to pay the monthly installments to their assigned trustee once the debts are restructured. It also helps homeowners who cannot take the burden of mortgage and wish to give up their property. Doing so, the debtors can hedge themselves from having to repay the deficient amount (along with interest) by paying off just the principle, in case the sale of the house falls short of the mortgage value.
Reasons for filing under Chapter 13 Bankruptcy
There are various reasons debtors file for Chapter 13 Bankruptcy. For example, if the individual wants to keep their assets when they have fallen behind on payments. This could include a home or an auto loan etc. One may also file for bankruptcy to discharge student loans, protect co-signer of loans etc.
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