Debt can affect people and their families in many ways. Whether you’re facing problems making your mortgage payments or dealing with a medical bill that’s too much to handle, you might consider filing for bankruptcy.
But what is the difference between Chapter 7 and Chapter 13? How can you know which is best for you?
Here, we will explain in detail what is involved in both Chapter 7 and Chapter 13 bankruptcy. We’ll also look at how an experienced Minnesota bankruptcy attorney can help you decide which is the best choice for you.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy enables you to eliminate most debts, including credit card debt, medical bills, personal loans, and more.
To start the process, you’ll submit a petition to the court that includes information about your income and expenses. After this, you’ll attend a meeting with creditors where you have to answer questions about your situation. Your creditors will be notified that they must stop contacting you regarding debt issues. If everything is approved, your debt can be discharged after about three months.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy (also known as “wage earner plan”) is a method of debt reorganization that allows you to pay back your creditors through a court-ordered payment plan. You can file for Chapter 13 bankruptcy if you have income that is more than your monthly living expenses and you have significant debt that you can’t pay off with your current income.
Chapter 13 bankruptcy requires filing a petition with the court and serving notice on your creditors. You will also need to meet with a trustee to develop a repayment plan. The court must approve this plan before it can take effect. If approved, it will last three to five years and must be completed before the case can be discharged.
Which One Should You Choose?
Chapter 7 is designed for people who want to eliminate their debt. In most cases, your unsecured debts will be extinguished (for example, credit card debt and medical bills).
Chapter 13 bankruptcy enables people with regular income to create a repayment plan for their creditors that lasts three to five years. This keeps their assets from being seized by creditors during this time because they must continue making payments under their repayment plan.
Contact Hoverson Law for Guidance
At Hoverson Law Offices, P.A., we specialize in helping people navigate the complex world of bankruptcy law. We have more than 35 years of experience helping people get out of debt to start fresh. Our firm is dedicated to providing compassionate and personalized service to each of our clients so they can feel comfortable throughout the process.
Call us at (612) 349-2728 or fill out our contact form for more information.
We target Minneapolis, Bloomington, and surrounding Minnesota communities.