Personal Bankruptcy
Take control of your future through Chapter 7 or Chapter 13 bankruptcy
Understanding Your Options
Chapter 7
- Over Fast
- No payment plan
- Discharge of personal liability
Chapter 7 typically is over in about four months with the goal of discharging debts without payment.
A Trustee is appointed in every case who reviews your bankruptcy papers and other information which your attorney will provide to the Trustee. The Trustee then conducts a hearing at which you and your attorney will be present and at which you will answer various questions posed by the Trustee about your personal affairs.
As in all bankruptcy cases an automatic stay or injunction stops many actions against you or your property. That stay ends when you receive the court order discharging your debts. If everything goes well you will never see the Bankruptcy Judge.
Unlike the reorganization Chapters of 11 and 13, Chapter 7 provides no opportunity to force creditors to accept late payments on your mortgage or car loan nor to catch up on your taxes. Also, creditors have more opportunity to object to the discharge of their particular debt.
Chapter 7 is only available to people who pass the means test.
- 3 year or 5 year payment plan
- Catch up on mortgage and car loan
- No creditor vote or veto
Chapter 13 provides you with an opportunity to propose a plan that can accomplish many beneficial results and also may require that you make certain payments to your unsecured creditors during the plan.
You may apply for a discharge of any balance remaining of your unsecured debt, which sometimes is 100% of it at the time your plan has been completed.
Like Chapter 7, Chapter 13 stops most litigation, foreclosures and other actions against you by the automatic stay. But this Chapter also provides you with rights to modify some mortgages and car loans for instance, and catch up on missed payments over a period of at least three years or, if your income is at a certain level or if you need the time to catch up, five years.
If you are unable to pass the means test to allow you to file Chapter 7, Chapter 13 may provide helpful relief instead.
You and your attorney will meet with your Chapter 13 Trustee to discuss the preparation of your case about a month after you file, and your case will go before the Judge maybe 45 days later for consideration of confirming your proposed Chapter 13 repayment plan.
Chapter 13
Chapter 11
- No debt limits
- Greater reorganization opportunities
- Expensive and complicated
Generally speaking Chapter 11 is intended for business bankruptcy. However, even if your debt is all consumer debt, Chapter 11 may be the way to go if your debt exceeds the limits of Chapter 13.
If your total secured or total unsecured debt exceed specified levels, which may include personal and/or business debt for which the individual is liable, Chapter 11 may work best for you. These levels change every three years; currently they stand at unsecured debt of $394,725; secured debt at $1,184,200. These levels will change again on April 1, 2022.